Question 4 Mah Seng Company Berhad had total earnings last year of $5 million but expects total earnings to drop to $4,750,000 this year because of a slowdown in the consumer sector. There are currently 1 million shares of common stock outstanding. The company has $4 million worth of investments to undertake this year. The company finances 40% of its investments with debt and 60% with equity capital. The company paid $3 per share in dividends last year. (a) If the company follows a pure residual dividend policy, how large a dividend will each shareholder receive this year? (8 marks) (b) If the company maintains a constant dividend payout ratio each year, how large a dividend will each shareholder receive this year? (10 marks) (c) If the company follows a constant dollar dividend policy, how large a dividend will each shareholder receive this year? (2 mark) [TOTAL: 20 Marks] Page 21