a)You are examining the dividend policy of a large 'blue-chip' tech company, Tech-Time Ltd. The following chart shows the company's EPS and DPS from 2014 to 2018.

What dividend policy does the chart suggest Tech-Time has adopted in the past? (6 marks)

b)A successful small-cap growth company, Technotronic Ltd, also operates in the technology industry. It has been generating regular earnings over the same period as Tech-Time, but never pays any cash dividends.

Explain this practise of not paying cash dividends based on:

(i)the clientele effect (7 marks); AND

(ii)dividend signalling theory (7 marks)