HUM Inc. is considering the following independent projects for the coming year.

Investment IRR

Project A $50 million 15%

Project B $120 million 20%

Project C $80 million 8%

Project D $100 million 12%

The cost of capital for the projects is 10%. The company's net income is expected to be $350 million. The company has to maintain its target capital structure, 30% debt and 70% common equity.

a) Find the company's total capital budget for the coming year. (5pts)

b) If the company strictly follows the residual distribution model, what will the company's payout ratio be? (5 pts)

c) If the company's net income is expected to be $150 million (instead of $350 million), how much common stocks (dollar value) should be newly issued? The company must maintain its target capital structure. (10 pts)