Air France Company has a target capital structure that consists of 40% debt, and 60% equity, the company is considering a project (capital budget) that costs $12,000,000 to launch five new Boeing Airplanes.

Also the company has the following information: Net income $8,800,000 Total sales $36,825,000 Earnings Per Share $4.4 Price per share $68

1- The equity needed for the capital budget is: *

$4,800,000

$7,200,000

$5,280,000

$3,520,000

None of the above

2- If the company needs to expand its project, then the dividend payout ratio is: *

60%

50%

40%

18.18%

None of the above

3- The company is intending to expand its project that costs $12,000,000; while paying dividend payout ratio of 40%, then the amount of external equity needed is: *

$1,920,000

$3,520,000

$4,800,000

$19,520,000

None of the above

4- If company decides to pay out dividends for 40%; then the maximum capital that it can use for expanding its project is: *

$3,520,000

$8,480,000

$5,280,000

$8,800,000

None of the above

5- If the company decides to pay out dividends for 30%; and then makes a split 2-for-1 then the dividend per share after split is: *

$0.15

$0.66

$1.32

$2

None of the above

6- If the company decides to pay out dividends for 30%; and then makes a split 5-for-3 then the earnings per share (EPS) after split is: *

$0.5

$1.67

$2.64

$7.33

None of the above

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