Xavier Corporation predicts that net income in the coming year will be $300 million.There are 30 million shares of common stock outstanding and Xavier maintains a debt to equity ratio of .8. The current market price per share for Xavier is $100.

Required:

a)If Xavier wishes to maintain its present debt-equity ratio, calculate the maximum investment funds available without issuing new equity and the increase in borrowing that goes along with it.

b)Suppose that the firm uses a residual dividend policy.Planned capital expenditures total $150 million.Based on this information, what will be the dividend yield and the dividend per share?

• c)Suppose Xavier plans no capital outlays for the coming year.What will be the dividend yield and the dividend per share, assuming that Xavier uses the residual dividend policy?