A financial analyst is attempting to assess the future dividend policy of Environmental Systems by examining its life cycle. She anticipates no payout of earnings in the form of cash dividends during the development stage (I). During the growth stage (II), she anticipates 14 percent of earnings will be distributed as dividends. As the firm progresses to the expansion stage (III), the payout ratio will go up to 40 percent and will eventually reach 53 percent during the maturity stage (IV).

a. Assuming earnings per share will be as follows during each of the four stages, indicate the cash dividend per share (if any) during each stage. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your answers to 2 decimal places.)

Stage I	$	0.25
Stage II		1.65
Stage III		2.40
Stage IV		3.90

Stage I ______

Stage II______

Stage lll______

Stage IV______

b. Assume in Stage IV that an investor owns 325 shares and is in a 15 percent tax bracket. What will be the investors aftertax income from the cash dividend? (Do not round intermediate calculations and round your answer to 2 decimal places.)

Aftertax income _______

c. In what two stages is the firm most likely to utilize stock dividends or stock splits? (Select two answers. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

__stage l

__stage ll

__stage lll

__stage IV

d.The shares of the Dyer Drilling Co. sell for $50. The firm has a P/E ratio of 25. Forty percent of earnings is paid out in dividends.

What is the firms dividend yield? (Do not round your intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Dividend Yield ______%