a) State and explain theories explaining why companies pay dividends to its shareholders.
(8 Marks)
b) Malikia investments Ltd. Wishes to raise funds amounting to Sh. 10 Million to finance a project in the following manner. Sh. 6 Million from debt; and Sh. 10 million from floating new ordinary shares the present capital structure of the company is made up as follows:
600,000 fully paid are ordinary shares of Sh. 10 each.
Retained earnings of Sh. 4 Million
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