This is a more difficult but informative problem. James Brodrick & Sons, Incorporated, is growing rapidly and, if at all possible, would like to finance its growth without selling new equity. Selected information from the companys five-year financial forecast follows.

Year	1	2	3	4	5
Earnings after tax ($ millions)	100	138	178	242	300
Capital investment ($ millions)	175	300	300	380	590
Target book value debt-to-equity ratio (%)	150	150	150	150	150
Dividend payout ratio (%)	?	?	?	?	?
Marketable securities ($ millions)	200	200	200	200	200
(Year 0 marketable securities = $200 million)

a. According to this forecast, what dividends will the company be able to distribute annually without raising new equity and while maintaining a balance of $200 million in marketable securities? What will the annual dividend payout ratio be? (Hint: Remember sources of cash must equal uses at all times.)

This is a more difficult but informative problem. James Brodrick & Sons, Incorporated, is growing rapidly and, if at all possible, would like to finance its growth without selling new equity. Selected information from the companys five-year financial forecast follows.

Year	1	2	3	4	5
Earnings after tax ($ millions)	100	138	178	242	300
Capital investment ($ millions)	175	300	300	380	590
Target book value debt-to-equity ratio (%)	150	150	150	150	150
Dividend payout ratio (%)	?	?	?	?	?
Marketable securities ($ millions)	200	200	200	200	200
(Year 0 marketable securities = $200 million)

a. According to this forecast, what dividends will the company be able to distribute annually without raising new equity and while maintaining a balance of $200 million in marketable securities? What will the annual dividend payout ratio be? (Hint: Remember sources of cash must equal uses at all times.)

I have no clue what I'm doing wrong. I've tried several formulas and keep getting this problem wrong.