$4.$ Assume that Company A$’$s capital budget is $$500,000$ with a debt ratio of $55\%$ and net income

of $$400,000,$ compute the following:

a$)$ dividend payout ratio

b$)$ dividend payout ratio if net income reduced to $$300,000$

c$)$ dividend payout ratio if net income increased to $$550,000$

$5.$ Assume that Company C$’$s capital budget is $$350,000$ with a debt ratio of $30\%$ and net income

of $$700,000,$ determine the following:

a$)$ dividend payout ratio

b$)$ dividend payout ratio if net income reduced to $$350,000$

c$)$ dividend payout ratio if net income increased to $$850,000$

$6.$ Differentiate the following:

a$)$ Residual Dividend Policy and Share Repurchase

b$)$ Stable Dividend Policy and Progressive Dividend Policy

c$)$ Regular Dividend Policy and Irregular Dividend Policy

$7.$ Based on your understanding, which dividend theory and policy is the best? Justify your

answer.

•