Mustard Berhad had total earnings last year of RM12,000,000, but expects total earnings to increase to RM12,500,000 this year because of the launching of new models. There are currently 1,000,000 shares of common stock outstanding. The company has RM8,000,000 worth of investments to undertake this year. The company finances 40% of its investments with debt and 60% with equity capital. The company paid RM7 per share in dividends last year.

Required:

1. What portion of the new investment will be financed by equity and what portion by debt?

2. If the company follows a pure residual dividend policy, how large a dividend will each shareholder receive this year?

3. If the company maintains a constant dividend payout ratio each year, how large a dividend will each shareholder receive this year?