(a) What are the main determinants of dividend policy in a corporate enterprise?

(b) Do you feel that a dividend decision is backed by a theoretical framework? What are different dividend theories? Describe each of them briefly. [6 marks] (

c) Suppose a company uses only debt and internal equity to nance its capital budget and uses CAPM to compute its cost of equity. Company estimates that its WACC is 12%. The capital structure is 75% debt and 25% internal equity. Before tax cost of debt is 12.5 % and tax rate is 20%. Risk free rate is rRF = 6% and market risk premium = 8% What is the beta of the company?

(d) With the help of relevant examples, differentiate between systematic and unsystematic risks.