RCA Company has generated $100,000 in earnings this year, last year it generated $30,000 in earnings and paid dividends of $1,500. This year RCA is thinking to expand a project and it needs a capital budget $70,000, knowing that the debt ratio of the company is 30%. If RCA needs to pay dividend same as the last year payout ratio, how much should it pay dividend for shareholders?

a) $5,100

b) $5,000

c) $51,000

d) None of the above

e) All of the above

2) Referring to the given in question one, if RCA needs to expand its project, how much can its payout ratio be? *

a) 5%

b) $51

c) 51%

d) None of the above

e) All of the above

3) Referring to the given in question one, if RCA decides to pay dividend same as the payout ratio of the last year, how much is the maximum capital that it can use for expanding its project? *

a) $135,000

b) $135,714.29

c) $472.5

d) None of the above

e) All of the above

4) Referring to the given in question one, if RCA decides to pay dividend same as the payout ratio of the last year, but it needs to make a new project that needs a capital for $137,143. How much external equity is needed to finance the project? *

a) $500

b) $1,000

c) $1,500

d) $2,000

e) None of the above