Problem 1 (20 marks) Harvest Health Care Company (HHC) has a debt/equity ratio of 6 which they want to maintain. They expect earnings to be $1,500,000 this year. Planned capital expenditures this year are $2,000,000. HHC has 500,000 shares outstanding with a current market value of $25 per share. a) Calculate the dividends per share, total external debt financing, and total external equity financing required if HHC has a 40% retention ratio. (8 marks) b) If HHC pays no dividends (100% retention ratio), and still wants to maintain a D/E ratio of 6, what is the maximum amount of capital expenditures they could do without issuing any new equity? (4 marks) c) Calculate the share price and the number of shares outstanding if HHC declares a 1 for 4 reverse split (before any planned capital expenditures). (4 marks) d) Independent of (c), calculate the share price and number of shares outstanding if HHC declares a 15% stock dividend (before any planned capital expenditures). (4 mark)