Alternative Dividend Policies

Boehm Corporation has had stable earnings growth of $5\%$ a year for the past $10$ years, and in $2019$ Boehm paid dividends of $$2$ million on net income of $$10$ million. However, net income is expected to grow by $26\%$ in $2020,$ and Boehm plans to invest $$7\mathrm{.}0$ million in a plant expansion. This one$-$time unusual earnings growth won't be maintained, though, and after $2020$ Boehm will return to its previous $5\%$ earnings growth rate. Its target debt ratio is $33\%.$ Boehm has $1$ million shares of stock.

Calculate Boehm's dividend per share for $2020$ under each of the following policies:

Its $2020$ dividend payment is set to force dividends per share to grow at the long$-$run growth rate in earnings. Round your answer to the nearest cent.

$

It continues the $2019$ dividend payout ratio. Round your answer to the nearest cent.

$

It uses a pure residual policy with all distributions in the form of dividends $(33\%$ of the $$7\mathrm{.}0$ million investment is financed with debt$).$ Round your answer to the nearest cent.

$

It employs a regular$-$dividend$-$plus$-$extras policy, with the regular dividend being based on the long$-$run growth rate and the extra dividend being set according to the residual policy. What will the extra dividend be$?$ Round your answer to the nearest cent.

$

Which of the preceding policies would you recommend?