What dividend per share could the company pay out if it targets a debt ratio of 50%?

The company expects to undertake projects worth a total of R50 million.

$$\text{Total capital required} = \text{R}50 \text{ million}$$

The target debt ratio is $50\%$. This implies that the target equity ratio is also $50\%$ ($100\% - 50\% = 50\%$).

$$\text{Equity required} = \text{Total capital required} \times \text{Equity ratio}$$ $$\text{Equity required} = \text{R}50 \text{ million} \times 0.50$$ $$\text{Equity required} = \text{R}25 \text{ million}$$

Under a residual dividend policy, the company uses its earnings to fund the equity portion of the projects first. Any earnings remaining after funding these projects are paid out as dividends.

$$\text{Total earnings available} = \text{R}70 \text{ million}$$ $$\text{Dividends available} = \text{Total earnings available} - \text{Equity required}$$ $$\text{Dividends available} = \text{R}70 \text{ million} - \text{R}25 \text{ million}$$ $$\text{Dividends available} = \text{R}45 \text{ million}$$

The company has 4.5 million shares in issue.

$$\text{Dividend per share} = \frac{\text{Dividends available}}{\text{Shares in issue}}$$ $$\text{Dividend per share} = \frac{\text{R}45,000,000}{4,500,000 \text{ shares}}$$ $$\text{Dividend per share} = \text{R}10 \text{ per share}$$

The final answer is $\text{b. R10}$.