Hard Rock(HR), Inc. predicts that earnings in the coming year will be $45 million. There are 12 million shares, and HR maintains a debt-equity of 2.

a. Calculate the maximum investment funds available without issuing new equity and the increase in borrowing that will be necessary.

b. Suppose the firm uses a residual dividend policy. Planned capital expenditures total $60 million. Based on this information, what will the dividend per share be.

c. In part (b), how much borrowing will be undertaken? What will be the addition to retained earnings?

d. Suppose HR plans no capital investment outlays for the coming year. What will the dividend be under a residual policy? What will new borrowing be?