Reynolds Paper Products Corporation follows a strict residual dividend policy. All else equal, which of the following factors would be most likely to lead to an increase in the firm's dividend per share?

a. The firm's net income increases.

b. The company increases the percentage of equity in its target capital structure.

c. The number of profitable potential projects increases.

d. Congress lowers the tax rate on capital gains. The remainder of the tax code is not changed.

e. Earnings are unchanged, but the firm issues new shares of common stock.

20.Which one of the following statements is TRUE?

a. The Corporate Valuation Model can be used to value companies whose capital structure is changing as long as the interest rate on the debt doesn't change.

b. The Corporate Valuation Model discounts FCFs at the unlevered cost of equity to obtain the intrinsic value of the firm's equity.

c. The APV model discounts the FCFs at the WACC to obtain the value of the tax shields.

d. The Corporate Valuation Model and the APV models will give the same answer for companies whose capital structure changes during the projection period, but whose capital structure remains constant over the horizon.

e. The APV model can be used to value companies whose capital structure is changing and companies whose capital structure is not changing.