Brooks Sporting Inc. is prepared to report the following 2018 income statement (shown in thousands of dollars).

Sales: $15,300

Operating costs including depreciation: 12,240

EBIT: $ 3,060 Interest: 330 EBT: $ 2,730 Taxes (40%): 1,092 Net income: $1,638

Prior to reporting this income statement, the company wants to determine its annual dividend. The company has 320,000 shares of common stock outstanding, and its stock trades at $37 per share.

1. The company had a 25% dividend payout ratio in 2017. If Brooks wants to maintain this payout ratio in 2018, what will be its per-share dividend in 2018?

2. If the company maintains this 25% payout ratio, what will be the current dividend yield on the companys stock?

3. The company reported net income of $1.35 million in 2017. Assume that the number of shares outstanding has remained constant. What was the companys per-share dividend in 2017?

4. As an alternative to maintaining the same dividend payout ratio, Brooks is considering- ing maintaining the same per-share dividend in 2018 that it paid in 2017. If it chooses this policy, what will be the companys dividend payout ratio in 2018?

5. Assume that the company is interested in dramatically expanding its operations and that this expansion will require significant amounts of capital. The company would like to avoid transactions costs involved in issuing new equity. Given this scenario, would it make more sense for the company to maintain a constant dividend payout ratio or to maintain the same per-share dividend? Explain.