number 12.

f. JKL Corporation currently has a cash balance of $100 million (after paying the current year's divi- dends). If it pays out $125 million as dividends next year, what will its projected cash balance be at the end of the next year? 12. GL Corporation, a retail firm, is making a decision on how much it should pay out to its stockholders It has $100 million in investible funds. The following informa- tion is provided about the firm: It has 100 million shares outstanding, each share selling for $15. The beta of the stock is 1.25 and the risk-free rate is 8%. The expected return on the mar- ket is 16%. The firm has $500 million of debt outstanding. The marginal interest rate on the debt is 12%. The corporate tax rate is 50%. The firm has the following investment projects: Project A B D E Investment After-Tax Requirement Return on Capital ($) (%) 15 million 27 10 million 20 25 million 16 20 million 14 30 million 12 The firm plans to finance all its investment needs at its current debt ratio. 8. Should the company return money to its stock - holders? b. If so, how much should be returned to stock- holders