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asap Pepper Berhad has found two acceptable investment opportunities that require a total of RM10 million in financing. The firm has generated RM8 million last
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Pepper Berhad has found two acceptable investment opportunities that require a total of RM10 million in financing. The firm has generated RM8 million last year, but they expect total earnings will increase to RM8.5 million that could be used to finance the common equity portion of its investments. It is the company's policy to finance its investments by using 60% debt and 40% common equity. There are currently 1,000,000 shares of common stock outstanding. Pepper Berhad paid RM3.90 per share in dividends last year. Required: a) What portion of the new investments will be financed by common equity and what portion by debt? (4 Marks) b) If the company follows a pure residual dividend policy, how much dividend per share will each shareholder receive this year? (4 Marks) 3 Financial Management (BAFB3013) September 2021 Final Examination CONFIDENTIAL c) If the company maintains a constant dividend payout ratio each year, how large a dividend per share will each shareholder receive this year? (5 Marks) d) If the company follows a constant dollar dividend policy, how large a dividend will each shareholder receive this year? (1 Marks) Step by Step Solution
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