3. A firm has had the indicated earnings per share over the last three years.

Year EPS

2003 $3.00

2002 $2.00

2001 $1.00

1. If the firm's dividend policy was based on a constant payout ratio of 50 percent, determine the annual dividend for each year.
2. If the firm's dividend policy was based on a fixed dollar payout policy of 50 cents per share plus an extra dividend equal to 75 percent of earnings per share above $1.00, determine the annual dividend for each year.