The Sharpe Co. just paid a dividend of $2.65 per share of stock. Its target payout ratio
Question:
The Sharpe Co. just paid a dividend of $2.65 per share of stock. Its target payout ratio is 50 percent. The company expects to have earnings per share of $6.30 one year from now.
a. If the adjustment rate is .3 as defined in the Lintner model, what is the dividend one year from now?
b. If the adjustment rate is .6 instead, what is the dividend one year from now?
c. Which adjustment rate is more conservative? Why?
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...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
a Using the formula from the text proposed by Lintner Div 1 Div 0 st EPS 1 Div ...View the full answer
Answered By
Charles mwangi
I am a postgraduate in chemistry (Industrial chemistry with management),with writing experience for more than 3 years.I have specialized in content development,questions,term papers and assignments.Majoring in chemistry,information science,management,human resource management,accounting,business law,marketing,psychology,excl expert ,education and engineering.I have tutored in other different platforms where my DNA includes three key aspects i.e,quality papers,timely and free from any academic malpractices.I frequently engage clients in each and every step to ensure quality service delivery.This is to ensure sustainability of the tutoring aspects as well as the credibility of the platform.
2+ Reviews
10+ Question Solved
Related Book For 
Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
Question Posted:
