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Assume that in 2017, The Shallonz Corporation reported netincome of $143 million, and paid dividends totaling $36.5 millionthroughout the year. Their net income has been growing at about 5%per year for some time, but it is expected to grow by 20% in 2018.Growth is expected to return to the normal 5% the following yearand thereafter. It has also been estimated that the company willneed about $52 million in funds for capital expenditures in 2018.The company is financed with 70% equity. What will be the company’spayout ratio if it follows a pure residual dividend policy in 2018?What would the payout ratio be if instead they allowed thedividends to grow at the same rate as the long-term growth rate inincome? What would you recommend they do? Please explain exactlywhy.