Alternative dividend policiesGiven the earnings per share over the period2015-2022 shown in the following table, determine the annual dividend per share under each of the policies set forth in parts a through d.

Year	Earnings per share
2022	$1.22
2021	$1.53
2020	$1.16
2019	$0.74
2018	$1.08
2017	$0.69
2016	$0.98
2015	$0.39

a.If the firm pays out 60% of earnings in all years with positive earnings, the annual dividend the firm would pay in year 2016 is $___. (Round to the nearest cent.)

b.If the firm pays $0.50 per share and increases the dividend to $0.70 per share whenever earnings per share rise above $1.10 per share for two consecutive years, the annual dividend the firm would pay in year 2016 is $___. (Round to two decimal places.)

c.If the firm pays $0.50 per share except when earnings exceed $1.20 per share, in which case pay an extra dividend of 70% of earnings above $1.20 per share, the annual dividend the firm would pay in year 2016 is $___. (Round to two decimal places.)

d.If the firm combines policies in parts b and c, when the dividend is raised (in part b), it raises the excess dividend base (in part c) from $1.20 to $1.30 per share. The annual dividend the firm would pay in this case in year 2016 is $___. (Round to two decimal places.)

e.Compare and contrast each of the dividend policies described in parts a through d.

Which policy uses a constant-payout ratio?(Select the best answer below.)

A. The policy described in part b is a constant-payout ratio which will yield low or no dividends if earnings decline or a loss occurs.

B. The policy described in part c is a constant-payout ratio which will yield low or no dividends if earnings decline or a loss occurs.

C. The policy described in part a is a constant-payout ratio which will yield low or no dividends if earnings decline or a loss occurs.

D. The policy described in part d is a constant-payout ratio which will yield low or no dividends if earnings decline or a loss occurs.

Which policy uses a regular dividend?(Select the best answer below.)

A. Policy described in part a uses a regular dividend policy which minimizes the owners' uncertainty of earnings.

B. Policy described in part b uses a regular dividend policy which minimizes the owners' uncertainty of earnings.

C. Policy described in part d uses a regular dividend policy which minimizes the owners' uncertainty of earnings.

D. Policy described in part c uses a regular dividend policy which minimizes the owners' uncertainty of earnings.

Which policy uses a low-regular-and-extra dividend policy?(Select the best answer below.)

A. Policy described in part a uses a low-regular-and-extra policy giving investors a stable income.

B. Policy described in part c uses a low-regular-and-extra policy giving investors a stable income.

C. Policy described in part d uses a low-regular-and-extra policy giving investors a stable income.

D. Policy described in part b uses a low-regular-and-extra policy giving investors a stable income.

Which policy provides the stability of a regular dividend but allows for future dividend growth?(Select the best answer below.)

A. Policy described in part d provides the stability of a regular dividend but allows for larger future growth of dividends.

B. Policy described in part b provides the stability of a regular dividend but allows for larger future growth of dividends.

C. Policy described in part c provides the stability of a regular dividend but allows for larger future growth of dividends.

D.Policy described in part a provides the stability of a regular dividend but allows for larger future growth of dividends.