a) You are examining the dividend policy of a large medical equipment manufacturing company, Hansell Ltd. The following chart shows the companys EPS and DPS from 2014 to 2018. What dividend policy does the graph suggest the company has adopted in the past? (5 marks) b) A successful growth company, Disher and Raykell Healthcare Ltd, also operates in the medical equipment industry. It has been generating regular earnings over the same period as Hansell Ltd but never pays any cash dividends. Explain this practise of not paying cash dividends based on: (i) the clientele effect (5 marks); AND (ii) dividend signalling theory (5 marks)

$6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $- C 2015 2018 2014 $1.60 $0.80 EPS 2017 3.6 2016 $4.80 $2.40 $4.20 $2.10 2 -DPS $1.80 $1.00 -EPS --DPS