A company analyst forecasts that a capital budget of $25,000,000 is needed to fund all its positive NPV projects. The firm has net income of $18,000,000 and 2,000,000 shares outstanding. M has paid a $2.00 per share dividend for many years and expects to pay that amount in the future. The firms target capital structure is 60% equity and 40% debt.

Given the firms capital structure, how much equity does it need to fund its capital budget? show work

If M plans to maintain its dividend, will it be able to supply its equity funding (in part a) with retained earnings only? show work

The CEO is considering cutting the dividend in order to fund the capital budget with retained earnings only. What would the dividend per share have to be to be able to fund all positive NPV projects with retained earnings? show work

The Board of Directors of M would not entertain a dividend cut but instead approved to increase the dividend to $2.50 per share in anticipation of the companys future growth. How much equity would need to be issued to pay this increased dividend and fund the capital budget with equity? show work