Universal Ltd has recently disposed of its telecom facilities in England and will report strong profit in 2012. The CFO is considering to pay out dividends to the shareholders. Below is the balance sheet:- Assets Cash $700,000 Accounts receivable $2,000,000 Fixed Assets $5,000,000 Total Assets $7,700,000 Liabilities and Stockholders' Equity Accounts payable $2,490,000 Short-term bank loan $10,000 Common stock (1,000,000 shares @ $3 par) $3,000,000 Retained earnings $2,200,000 Total liabilities and stockholders' equity $7,700,000 Additional info: Universal has a short-term bank facility limit for $5,000,000 that was only slightly utilized. The maturity date of the loan is on May 30, 2013. The bank manager will then examine the company to decide whether to renew the bank facility. 4 1) As the company will report strong earnings, the shareholders expect very good dividende payment this year. what is the maximum amount of dividends per share the firm could pay? 4 Do you recommend to do so? 2) In terms of current cash availability, what is the maximum amount of dividends per share the firm could pay? 3) Assume the firm earned an 18 percent return on stockholders' equity last year. If the board wishes to pay out 50 percent of earnings in the form of dividends, how much will dividends per share be? F