Bennett Farm Equipment Sales, Inc. is in a highly cyclical business. Although the firm has a target payout ratio of 30 %, its board realizes that strict adherence to that ratio would result in a fluctuating dividend and create uncertainty for the firm's stockholders. Therefore, the firm has declared a regular dividend of $0.40 per share per year with extra cash dividends to be paid when earnings justify them. Earnings per share for the last several years are as follows:

a.Calculate the payout ratio for each year on the basis of the regular $0.40 dividend and the cited EPS.

b. Calculate the difference between the regular $0.40 dividend and a 30 % payout for each year.

c. Bennett has established a policy of paying an extra dividend of $0.25 only when the difference between the regular dividend and a 30% payout amounts to $1.00 or more. In which year would an extra dividend be paid? What would be done with the "extra" earnings that are not paid out?

d.The firm expects that future earnings per share will continue to fluctuate but will remain above $3.19per share in most years. What factors should be considered in making a revision to the amount pais as a regular dividend? If the firm revises the regular dividend, what new amount should it pay?

- X Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Year EPS Year EPS $3.51 $3.26 2019 2016 $3.23 $2.46 2018 2015 $3.19 2014 $1.87 2017 Print Done