Kendra Brown is analyzing the capital requirements for Reynolds Corporation for next year. Kendra forecasts that Reynolds will need $14 million to fund all of its positive-NPV projects, and her job is to determine how to raise the money. Reynolds's net income is $10 million, and it has paid a $4.00 dividend per share (DPS) for the past several years (1.0 million shares of common stock are outstanding); its shareholders expect the dividend to remain constant for the next several years. The company's target capital structure is 40% debt and 60% equity.

Suppose Reynolds follows the residual model and makes all distributions as dividends. How much retained earnings will it need to fund its capital budget? Round your answer to the nearest dollar.

If Reynolds follows the residual model with all distributions in the form of dividends, what will be its dividend per share? Round your answer to the nearest cent.

What will be payout ratio for the upcoming year? Round your answer to two decimal places.