Refer to Figure 1. Would you say that Pennys policy up to now has been to pay a constant dividend, with occasional increases as the company grows? 2. Refer to Figure 2. What type of dividend policies would you say are being practiced by Pennys competitors in the retailing industry? 3 What kind of signal a change to residual dividend policy will send to the shareholders and the investment community? 4. How does the residual dividend policy support Modigliani and Millers (MM) theory about dividend policy in a world with no taxes? 5. Do you go along with Clarence Autrys comment that its what the stockholders want that counts, not their total rate of return? Why or why not? 6. Barbara Reynolds suggests that, if cash is needed for the capital budget, a stock dividend could be substituted for the cash dividend. Do you agree? How do you think the stockholders would react? Regardless of their reaction, is the stock dividend an equivalent substitute for the cash dividend? 7. After all is said and done, do you think the firms dividend policy matters? If so, what do you think Pennys policy should be? Additional Question #8. Assume that Penny Corporation is a cash-only company. The company is now considering switching to a 30-day credit policy with no discounts. What factors should the firm consider before making the switch? Discuss.