PTW Corp require RM100 million for capital budgeting investments. The current net income is RM30 million. The company can finance 30% of the required investment with debt and 70% with equity.

Equity financing needed RM70M.

From Net Income RM25.

New Issues RM70 RM25 = RM45

a) How much new share issues does PTW require if dividends paid is RM5 Million.

Equity Financing needed RM70M

New Issue RM50M

Net Income RM20M

Dividend RM30 RM20 = RM10M

b) How much dividend can pay PTW pay if they can finance RM50M of the investment with new issues.