Question
Alternative dividend policies Over the last 10 years, a firm has had the earnings per share shown in the following table: a.If the firm's dividend
Alternative dividend policies Over the last 10 years, a firm has had the earnings per share shown in the following table:
a.If the firm's dividend policy were based on a constant payout ratio of 40% for all years with positive earnings and 0% otherwise, what would be the annual dividend for 2014?
b.If the firm had a dividend payout of $1.00 per share, increasing by $0.10 per share whenever the dividend payout fell below 50% for two consecutive years, what annual dividend would the firm pay in 2014?
c.If the firm's policy were to pay $0.50 per share each period except when earnings per share exceed $3.00, when an extra dividend equal to 80% of earnings beyond $3.00 would be paid, what annual dividend would the firm pay in 2014?
d.Discuss the pros and cons of each dividend policy described in parts a through
Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Year Earnings per share Year Earnings per share 2022 $3.73 2017 $3.89 2021 $4.71 2016 $1.85 2020 $3.55 2015 $1.77 2019 $3.72 2014 - $1.53 2018 $3.97 2013 $0.27Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started