The Sharpe Co. just paid a dividend of $2.30 per share of stock. Its target payout ratio

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The Sharpe Co. just paid a dividend of $2.30 per share of stock.

Its target payout ratio is 40 percent. The company expects to have earnings per share of $6.95 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?

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Corporate Finance

ISBN: 9781265533199

13th International Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

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Question Posted: Nov 22, 2023 03:33 AM

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The Sharpe Co. just paid a dividend of $2.30 per share of stock. Its target payout ratio

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Corporate Finance

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