Question
Advanced Vehicle Enterprises (AVE) follows a policy of paying 50% of its net income as cash dividends to its shareholders each year. The company plans
Advanced Vehicle Enterprises (AVE) follows a policy of paying 50% of its net income as cash dividends to its shareholders each year. The company plans to do so again this year, during AVE earned $100 million in net profit after tax. The company has 40 million outstanding and pays dividend annually.
(a) what is the companys dollar dividend payment per share each year?
(b) Assuming the AVEs share price is $54 per share immediately before its ex-dividend date, what is the expected price of AVE shares on the ex-dividend date if there are no personal taxes on dividend income received?
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