Good Luck! AG is a semiconductor company operating in Munich, Germany. The capital budget of the company is 20 billion.

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Good Luck! AG is a semiconductor company operating in Munich,
Germany. The capital budget of the company is 20 billion. The CFO
of the company believes that the company should maintain a target
capital structure with 40% debt and 60% equity. The forecasted net
income of the company is €10 billion.
a) How much of the €10 billion should the company pay out as
dividends? (5 marks)
b) Mr. Müller, who is a senior board member in the company
claims that the net income of €10 billion is a bit optimistic and
suggests that the company should consider net incomes of €7,3
billion instead. Mrs. Schneider, however, believes that the company
should consider a higher net income of €11 billion for the next
year. By applying residual dividend model, calculate the payout
ratio under each scenario? Critically discuss what are the impact
of these changes on the payout ratio and how it might affect the
customers. Do you believe the firm should consider the residual
dividend policy? Critically discuss your answer.