The senior management team at Bettis Company is working on setting its dividend payout policy for the current year. The team is debating whether to pay out 75% or 25% of its net income as a dividend. Bettis is an all-equity financed company, and it has $700 million of assets at the end of its most recent year. Bettis has a cost of equity of 6.81%. The following shows a simplified income statement forecast for the coming year.

a. Calculate Bettiss growth rate of assets if the company pays out 75% of its net income as a dividend.

b. Calculate Bettiss growth rate of assets if the company pays out 25% of its net income as a dividend.

c. Does the value of Bettiss shares change depending on the choice of dividend payout? Please provide a basic example demonstrating why or why not.

Please show your work.

Thanks for any help!

\begin{tabular}{|l|r|r|} \hline & & 2023 \\ \hline Sales & $ & 1,000,000 \\ \hline - Expenses & $ & 940,450 \\ \hline EBT & $ & 59,550 \\ \hline - Taxes & $ & 11,910 \\ \hline Net income & $ & 47,640 \\ \hline \end{tabular}