This is a more difficult but informative problem. James Brodrick & Sons, Incorporated, is growing rapidly and, if at all possible, would like to finance its growth without selling new equity. Selected information from the company's five-year financial forecast follows. Year Earnings after tax ($ millions) Capital investment ($ millions) Target book value debt-to-equity ratio (%) Dividend payout ratio (%) Marketable securities ($ millions) (Year marketable securities = $230 million) Year Dividends (millions) Divident Payout ratio (%) 1 1 100 170 130 ? 230 2 a. According to this forecast, what dividends will the company be able to distribute annually without raising new equity and while maintaining a balance of $230 million in marketable securities? What will the annual dividend payout ratio be? (Hint: Remember sources of cash must equal uses at all times.) Note: Round dividends to the nearest million dollars and the payout ratio % to the nearest ones place. 2 122 300 130 ? 230 ($ millions) 3 3 162 300 130 ? 230 4 4 218 364 130 ? 230 5 300 510 130 ? 230 5

This is a more difficult but informative problem. James Brodrick \& Sons, Incorporated, is growing ropidly and, if ot all possible, would like to finance its growth without selling new equity. Selected information from the company's flve-year financial forecast follows. a. According to this forecast, what dividends will the company be able to distribute annually without raising new equity and while maintaining a balonce o 5230 million in marketable securites? What will the annual dividend payout ratio be? (Hint: Remember sources of cash must equal uses at all times.) Note: Round dividends to the nearest million dollars and the poyout rotio \% to the nearest ones place