The residual dividend policy approach to dividend policy is based on the theory that a firm's optimal dividend distribution policy is a function of the firm's target capital structure, the investment opportunities available to the firm, and the availability and cost of external capital. The firm makes distributions based on the residual earnings. Consider the case of Yellow Duck Distribution Company: Yellow Duck Distribution Company is expected to generate $200,000,000 in net income over the next year. Yellow Duck Distribution Company has forecasted a capital budget of $83,000,000, and it wishes to maintain its current capital structure of 70% debt and 30% 30% Equity 70% Debt equity. If the company follows a strict residual dividend policy and makes distributions in the form of dividends, what is its expected dividend payout ratio for this year? O 78.80% 87.55% O 91.93% O 83.17% Yellow Duck Distribution Company is considering using more equity and less debt in its capital structure. Which of these statements best describes how this will affect the firm's annual dividend, assuming that all other factors are held constant? Yellow Duck Distribution Company will pay a smaller annual dividend if it goes forward with this decision. Yellow Duck Distribution Company's annual dividend will be greater if it goes forward with this decision. If you were to graph a firm's earnings and dividends over the past 20 years, which would you expect to be the most stable over time? O The firm's dividends The firm's earnings