The board of Kopi Industries is considering a new dividend policy that would set dividends at 60%

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The board of Kopi Industries is considering a new dividend policy that would set dividends at 60% of earnings. The recent past has witnessed earnings per share (EPS) and dividends paid per share as shown in the following table.

EPS Dividend/share Year $1.75 $0.95 2016 2017 1.95 1.20 2.05 2018 1.25 2019 2.25 1.30

Based on Kopi’s historical dividend payout ratio, discuss whether a constant payout ratio of 60% would benefit shareholders.

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Principles of Managerial Finance

ISBN: 978-0134476315

15th edition

Authors: Chad J. Zutter, Scott B. Smart

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Question Posted: May 23, 2019 08:58 AM

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The board of Kopi Industries is considering a new dividend policy that would set dividends at 60%

Question:

EPS Dividend/share Year $1.75 $0.95 2016 2017 1.95 1.20 2.05 2018 1.25 2019 2.25 1.30

Step by Step Answer:

The first step in analyzing the Kopi scenario is to determine the historica...View the full answer

Principles of Managerial Finance

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