Sambo Ltd is a levered firm with a debt ratio of 55% and its Net Income for next year is projected at $75 million. There are 12 million shares outstanding at a price of $27.47 per share. Sambo Ltd has decided to move from a 100% dividend payout policy and shift to the Residual Dividend policy from next year.

a) What is the EPS and DPS for Sambo under the 100% dividend payout policy?

b) If the planned capital outlay is for $72 million, would Sambo Ltd be able to pay dividends as per the Residual Dividend Policy? If so, what will be the dividend per share? Ignore taxes.    

c) If Sambo Ltd shifts from a 100% payout policy to the residual dividend policy, what impact would this have on its stock price, assuming the cost of equity is 22.75% and the dividend growth rate is projected at 5%? Support your argument through relevant computations. Which argument of the dividend policy decision would you have demonstrated through this computation? (Assume constant growth rate stock valuation model for computing stock price).  

Data were collected from a survey given to graduating college seniors on the number of times they had changed majors. From that data, a probability distribution was constructed. The random variable X is defined as the number of times a graduating senior changed majors. It is shown below: x P(X = x) 1 2 3 4 5 6 0.259 0.301 0.152 0.156 0.073 0.039 0.0 0 a. What is the probability that a randomly selected student changed his or her major at least once? b. What is the probability that a randomly selected student changed his or her major at most twice? c. Given that a randomly selected person did change majors, what is the probability that he or she changed majors more than three times?