Is 1.2.1 840,000 or 868,000? Do I count the 2.1 or just 2 on for the debt ratio? If I use 2 only please elaborate further as I'm trying to understand why are not counting the .11.2.2 planned investments of 850 000; with 840 000 dividends will not be paid and new equity will be issued. However if maximum amount of capital spending is 868,000 company will be able to pay dividends (yes/no) elaborate further Explain 1.2.3 and 1.3 QUESTION ONE[10]1.1.Explain what a residual dividend policy is.(2)1.2.Blippi Ltd follows a strict residual dividend policy. Their debt equity ratio is 2:1.1.2.1If their profits are R280 000 for the current year, what is the maximumamount of capital spending possible with no new equity?(2)1.2.2. If planned investment outlays for the current year are R850 000, will Blippi beable to pay a dividend?(2)1.2.3 Does Blippi Ltd maintain a constant dividend payout? Explain.(2)1.3Explain if retained earnings are a free source of finance for the business.(2)

As per the honor code, We’ll answer the first question since the exact one wasn’t specified. Please…

1.2. Blippi Ltd follows a strict residual dividend policy. Their debt equity ratio is 2:1. 1.2.1 If their profits are R280 000 for the current year, what is the maximum amount of capital spending possible with no new equity? (2) 1.2.2. If planned investment outlays for the current year are R850 000, will Blippi be able to pay a dividend? (2) 1.2.3 Does Blippi Ltd maintain a constant dividend payout? Explain. (2)

1.2. Blippi Ltd follows a strict residual dividend policy. Their debt equity ratio is 2:1. 1.2.1 If their profits are R280 000 for the current year, what is the maximum amount of capital spending possible with no new equity? (2) 1.2.2. If planned investment outlays for the current year are R850 000, will Blippi be able to pay a dividend? (2) 1.2.3 Does Blippi Ltd maintain a constant dividend payout? Explain. (2)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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