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    tucoquito's Avatar
    tucoquito Posts: 3, Reputation: 1
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    #1

    Jun 20, 2008, 06:42 PM
    Constant debt-equity ratio
    Merrillan Motors had earnings of $8 million last year. It made $5 million on investment in projects with positive net present values. Pat Collins owns 20% of the firm’s common stock. Assume that Pat desires no change in proportional ownership of Merrillan and the firm wishes to maintain a constant debt-equity ratio.

    What will be Pat’s action in response to

    a. Merrillan’s paying out dividends of $5 million?

    b. Merrillan’s paying out dividends of $1 million?

    c. Merrillan’s paying out dividends of $3 million?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Jun 20, 2008, 08:21 PM
    Please see our guidelines in red print at the top of this page on posting homework problems:

    https://www.askmehelpdesk.com/financ...-b-u-font.html
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