Qnetiq Plc has a WACC of 5.9% and achieved a profit of 4.18bn for 2020. With no additional investments planned to take place next year, there is forecasted to be a profit of 3.98bn for 2021.

They have the following projects available for the 2021:

(ms)

Project Investment at T₀ Return at T₁

Liverpool 137 140

Manchester 277 281

Newcastle 238 264

Birmingham 922 745

London 514 883

Bristol 362 500

Leeds 1,246 1,500

Required:

(a) Explain in detail and provide an illustrative example of the Principle of Dividends as a Residual.

(b) What would be the total value of Qnetiq if it does not and also if it does, follow the passive dividend policy? Explain in detail the results.

(c) Explain in detail the main influences that affect the level of dividend that Qnetiq could pay.

(d) Describe in detail the main assertive dividend policies available to Qnetiq.