Alternative Dividend PoliciesBoehm Corporation has had stable earnings growth of $5\%$ a year for the past $10$ years and in $2018$ Boehm paid dividends of $$3\mathrm{.}5$ million on net income of $$18\mathrm{.}3$ million. However, in $2019$ earnings are expected to jump to $$21\mathrm{.}4$ million, and Boehm plans to invest $$13\mathrm{.}908$ million in a plant expansion. This one$-$time unusual earnings growth won't be maintained, though, and after $2019$ Boehm will return to its previous $5\%$ earnings growth rate. Its target debt ratio is $35\%.$ Boehm has $1$ million shares of stock.

Calculate Boehm's dividend per share for $2019$ under each of the following policies:

$1.$ Its $2019$ 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 dollar.$

$2.$ It continues the $2018$ dividend payout ratio. Round intermediate calculations to four decimal places. Round your answer to the nearest dollar.$

$3.$

It uses a pure residual policy with all distributions in the form of dividends $(35\%$ of the $$13\mathrm{.}908$ million investment is financed with debt$).$ Round your answer to the nearest dollar.$

$4.$ 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 dollar.$ $5.$ Which of the preceding policies would you recommend?

$6.$

Does a $2019$ dividend of $$8$ million seem reasonable in view of your answers to parts a and b If not, should the dividend be higher or lower? $($choose A $,$ B or C$)$

A$.$No$.$ As a regular dividend it should be lower than $$8$ million.

B

Yes. As a regular dividend it should be equal to $$8$ million.

C $.$ No$.$ As a regular dividend it should be higher than $$8$ million.