Suppose Tonga at Limited predicts that earnings in the coming year will be N$43 million. There are 8 million shares, and the company maintains a debt-equity ratio of 0.90
Requirement:
a) Calculate the maximum investment funds available without issuing new equity.
(1 mark}
b) Calculate the increase in borrowing that goes along with (a} above. (3 marks}
c) If the firm follows a residual dividend policy and the planned capital expenditure total N$50 million, calculate the dividend per share if any.
