Long-term debts Shareholders Funds Total Liabilities & Equity RM120 million RM180 million A. RM8 million B. RM12 million C RM20 million D. RM33.5 million RM300 million New bonds with 10 percent coupon were sold at par value. Ordinary shares currently trading at RM8 per share can be issued by the company at RM9 per share. The company currently has 180 million ordinary shares outstanding. Shareholders expect a rate of return of 2 percent dividend yield and 8 percent growth in earnings. Net income is expected to be RM33.5 million. The corporate tax rate is 28%. Assume that the total budget for asset expansion is RM20 million. 13. To maintain the present capital structure, how much of the capital budget must the company finance by equity? Check

14. If the company follows a residual dividend policy, how large a dividend will each shareholder receive this year? A RM0 19 dividend per share B RM0 14 dividend per share C. RM0 12 dividend per share D RM0 08 dividend per share 15. If the company maintains a constant dollar dividend policy, what is the dividend payout ratio? A 11% B 43% C 64% D 86% 16. How much of the required equity funds will be generated externally, if the company maintains a constant dollar dividend policy? A Zero B. RM7 3 million C RM15 3 million D RM20 million