Alternative Dividend Policies 10-year earnings growth 2015 Dividends 2015 Net income Expected 2016 Net income Plant Expansion Future earnings growth, after 2016 Debt ratio $3,700,000 $20,000,00 $34,000,00 $14,600,00 600% 3500% Calculation of 2016 total dividends under different policies: 2016 dividends if dividends grow at long-run eanings growth rate 2016 dividends if continue 2015 dividend payout ratio 2016 dividends if it uses pure residual policy 2016 dividends under regular-dividend-plus-extras policy: Regular dividends (based on long-run eanings growth rate) Extra dividend (based on residual policy) 9 Formulas #N/A #N/A #NIA 5 #N/A #NIA