Evergreen Incs most recent Statement of Financial Position is given below.

Evergreen Inc. Statement of Financial Position As at Dec 31, 2021

Assets

Cash 425,000$

Accounts Payable 300,000$

Accounts Receivable 400,000$

Inventories 500,000$

Total Current Assets1,325,000$

Net Fixed Assets18,000,000$

Total Assets19,325,000$

Liabilities

Accounts Payable 300,000$

Other Current Liabilities 425,000$

Total Current Liabilities 725,000$

LT Debt 2,500,000$

Common Stock (85,000 shares o/s) 4,500,000$

Retained Earnings 11,600,000$

Total Liabilities & Owners Equity 19,325,000$

Additional Information:

• Current market price per common share = $ 195
• Before tax cost of borrowing (secured loan) = 5%
• Weighted Average Cost of Capital =12%
• Net Income for 2021 = $925,000
• Target D/E ratio based on market values = 0.25
• Corporate tax rate = 35%
• i) Suppose Evergreen uses a retention ratio of 30%. Their capital budget for the upcoming year = $1,600,000. Calculate the debt, external equity financing required and the dividends per share.

ii) Suppose instead, Evergreen follows a stable dividend policy and declares a $2.00 per share dividend. The holder of record date is January 10, 2022, and the payment date is January 31, 2022. Emily sold 500 shares of Evergreen on January 7, 2022, to Anna. Which of the two investors will receive the dividends? How much dividend income with they receive?