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

Year 2003 - EPS $3.00

Year 2002 -EPS $2.00

Year 2001 - EPS $1.00

a. If the firm's dividend policy was based on a constant payout ratio of 50 percent, determine the annual dividend for each year.

b. 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.