1. 1. A Corporation had a net income of $800,000 in 2019. Earnings have grown at an 8 percent annual rate. Dividends in 2019 were $300,000. In 2020, the net income was $1,100,000. This, of course, was much higher than the typical 8 percent annual growth rate. It is anticipated that earnings will go back to the 8 percent rate in future years. The investment in 2020 was $700,000. How much dividend should be paid in 2020:
      1. If a stable dividend payout ratio of 25 percent?
      2. If a stable dollar dividend policy is maintained?
      3. If a residual-dividend policy is maintained and 40 percent of the 2020 investment is financed with debt?
2. 4. If the investment for 2020 is to be financed with 80 percent debt and 20 percent retained earnings? Any net income not invested is paid out in dividends.
   5. Discuss and Explain MMs informational and clientele effects and Gordon and Lintners bird-in the-hand argument. Which argument appeals most to you? Why?