The Beta Alpha company expects with some degree of certainty to generate the following net income and to have the following capital expenditures during the next 5 years in thousands:

Year12345

Net income20001500250023001800

Cap Exp10001500200015002000

The company currently has 1 million shares of common stock outstanding and pays dividends of $1 per share.

Required:

a)Determine dividends per share and external financing required in each year if dividend policy it treated as a residual decision.

b)Determine the amounts of external financing in each year that will be necessary if the present dividend per share is maintained.

c)Determine dividends per share and the amount of external financing that will be necessary if a dividend payout ratio of 50% is maintained.