40% Red Bison Petroleum Producers Corporation is expected to generate $180,000,000 Equity in net income over the next year. Red Bison Petroleum Producers's stockholders 60% expect it to maintain its long-run dividend payout ratio of 20% of earnings Debt If the firm wants to maintain its current capital structure of 60% debt and 40% equity, the maximum capital budget it can support with this year's expected net income is Red Bison Petroleum Producers is considering using equity and less debt in its capital structure. Which of these more statements best describes how this will affect the firm's annual dividend, assuming that all other factors are held constant? Red Bison Petroleum Producers will pay a smaller annual dividend if it goes forward with this decision. Red Bison Petroleum Producers's annual dividend will be greater if it goes forward with this decision. Most firms have earnings that vary considerably from year to year and do not grow at a reliably constant pace. Furthermore, their required investment may change often. Does this mean that the residual distribution policy approach can't be of any help to most firms? Yes No If you were to graph a firm's earnings, cash flows, and dividends over the past 20 years, which would you expect to V be the most stable over time? Earnings Dividends Cash flow