Alex is analyzing the capital requirements for UNR Corporation for next year. She has a following projects to choose from.

Projects	IRR(%)	Cost of capital(%)	Cost(%)
A	15	12	15
B	16	17	16
C	17	15	20
D	12	10	12
E	18	16	10

UNR Corporation Will fun all profitable projects. UNR Corporation recently reported sales of $ 80 million and net income of $ 40 million. The firm has 6 million shares of common stock outstanding, and it has paid a $ 2 dividend per-share(DPS) for the past several years. The companies target capital structure is 40% debt and 60% equity.

1. Suppose UNR Corporation follows a residual model and makes all distributions as dividends. What will be its dividend per-share and payout ratio for the upcoming year?
2. Now consider the case in which UNR Corporation management wants to maintain the $2 DPS and its target capital structure but also wants to avoid issuing stock or debt. The company is willing to cut its capital budget in order to meet its other objectives. Assuming the companies projects are divisible Assuming the companies projects are divisible, what will be the companys capital budget for the next year?
3. Assume that firm can change its capital structure without any costs, at what target equity level(i. E., at which capital structure) firm can maintain $2 DPS and does not need to cut its capital budget?
4. CEO wants to follow a dividend policy that is solely based on residual distribution model. Do you agree?