The Reynolds Paper Products Corporation follows a strict residual dividend policy. All other things being equal, which of the following factors or circumstances would be most likely to lead to an increase in the firms dividend per share, and briefly explain why?

1. The company increases the percentage of equity in its target capital structure.
2. The number of potentially profitable projects increases.
3. Congress lowers the tax rate on capital gains but the remainder of the tax code is unchanged.
4. The companys net income increases.
5. Earnings are unchanged, but the company issues new shares of common stock.