Advanced Vehicle Enterprises (AVE) follows a policy of paying out 50% of its net income as cash

Question:

Advanced Vehicle Enterprises (AVE) follows a policy of paying out 50% of its net income as cash dividends to its shareholders each year. The company plans to do so again this year, during which AVE earned $100 million in net profits after tax. The company has 40 million shares outstanding and pays dividends annually.
a. What is the company’s dollar payment per share each year?
b. Assuming that AVE’s stock price is $54 per share immediately before its ex-dividend date, what is the expected price of AVE stock on the ex-dividend date if there are no personal taxes on income received?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...