Alternative dividend policiesOver 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 2010?

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 2010?

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 2010?

d.Discuss the pros and cons of each dividend policy described in parts a through c.

Year	Earnings Per Share	Year	Earnings Per Share
2015	$1.50	2010	$3.29
2014	$4.68	2009	$1.22
2013	$3.41	2008	$1.22
2012	$2.72	2007	-$0.89
2011	$3.32	2006	$0.22