5.2. Blippi Ltd follows a strict residual dividend policy. Their debt equity ratio is 2:1.

1. If their profits are R280 000 for the current year, what is the maximum

amount of capital spending possible with no new equity?

2. If planned investment outlays for the current year are R850 000, will Blippi be

able to pay a dividend?

3. Does Blippi Ltd maintain a constant dividend payout? Explain.

5.4 Distinguish between a merger and acquisition and explain which is the most common

type in South Africa, justify your answer.