Projects IRR (X) Cost of Capital (%) Cost ($M) 21 20 15 B 15 14 22 C 13 15 18 D 18 16 20 E 12 14 10 UNR Corp. will fund all of profitable projects and Alex must determine how to raise the money. UNR Corp's net income is $45 million, and it has paid a $4 dividend per share (DPS) for the past several years (6 million shares of common stock are outstanding): its shareholders expect the dividend to remain constant for the next several years. The company's target capital structure is 40% debt and 60% equity. UNR Corp. will fund all of profitable projects and Alex must determine how to raise the money, UNR Corp's net income is $45 million, and it has paid a $4 dividend per share (DPS) for the past several years (6 million shares of common stock are outstanding); its shareholders expect the dividend to remain constant for the next several years. The company's target capital structure is 40% debt and 60% equity. a. Suppose UNR corp. follows the residual model and makes all distributions as dividends. How much retained earnings will it need to fund its capital budget? What will be its dividend per share and payout ratio for the upcoming year? b. Now consider the case in which UNR corp's management wants to maintain the $4 DPS and its target capital structure but also wants to avoid issuing stock or debt. The company is willing to cut its capital budget in order to meet its other objectives. Assuming the company's projects are divisible, what will be the company's capital budget for the next year? c. Assume that firm can change its capital structure without any costs, at what target equity level (i.e., at which capital structure) firm can maintain the $4 DPS and does not need to cut the its capital budget? Projects IRR (X) Cost of Capital (%) Cost ($M) 21 20 15 B 15 14 22 C 13 15 18 D 18 16 20 E 12 14 10 UNR Corp. will fund all of profitable projects and Alex must determine how to raise the money. UNR Corp's net income is $45 million, and it has paid a $4 dividend per share (DPS) for the past several years (6 million shares of common stock are outstanding): its shareholders expect the dividend to remain constant for the next several years. The company's target capital structure is 40% debt and 60% equity. UNR Corp. will fund all of profitable projects and Alex must determine how to raise the money, UNR Corp's net income is $45 million, and it has paid a $4 dividend per share (DPS) for the past several years (6 million shares of common stock are outstanding); its shareholders expect the dividend to remain constant for the next several years. The company's target capital structure is 40% debt and 60% equity. a. Suppose UNR corp. follows the residual model and makes all distributions as dividends. How much retained earnings will it need to fund its capital budget? What will be its dividend per share and payout ratio for the upcoming year? b. Now consider the case in which UNR corp's management wants to maintain the $4 DPS and its target capital structure but also wants to avoid issuing stock or debt. The company is willing to cut its capital budget in order to meet its other objectives. Assuming the company's projects are divisible, what will be the company's capital budget for the next year? c. Assume that firm can change its capital structure without any costs, at what target equity level (i.e., at which capital structure) firm can maintain the $4 DPS and does not need to cut the its capital budget