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 20152015?

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 2015?

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 2015?

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

spreadsheet.)

Year

Earnings per share

Year

Earnings per share

2015

$4.58

2010

$3.62

2014

$3.55

2009

$1.08

2013

$3.49

2008

$1.52

2012

$2.09

2007

-0.61

2011

$4.14

2006

$0.89