P6.11 Southern Cities Trucking Company has the following five-year record of earnings per share. Year EPS 2006

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P6.11 Southern Cities Trucking Company has the following five-year record of earnings per share.

Year EPS 2006 $1.40 2007 2.10 2008 1.00 2009 3.25 2010 0.80 Which of the following procedures would produce the greater amount of dividends to shareholders over this five-year period?

a. Paying out dividends at a fixed ratio of 40% of EPS

b. Paying out dividends at a fixed rate of $1 per share

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