Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

CVS Health Corporation is a health care company. The management team maintains a stable dividend using the Lintner model: Dt+1 = D+ + AEPS Target

image text in transcribed
CVS Health Corporation is a health care company. The management team maintains a stable dividend using the Lintner model: Dt+1 = D+ + AEPS Target Payout 1 Where D(DE+1) - dividend in the current period t (the next period t + 1) EPS+ = earnings per share in period t AEPS = EPS++1 - EPS+ = change in EPS Target Payout = target payout ratio = 40% 1 = adjustment factor = 0.05 Last quarter, the dividend was $0.5 per share, and the earnings per share were $5.10. The management is forecasting that earnings in the upcoming quarter will increase to $5.73 per share. What dividend for next quarter should analysts predict? Make your answer accurate to cents. That is, if your answer is 9.252, write 9.25. Also, do not include symbols (%,$) in your

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International financial management

Authors: Jeff Madura

12th edition

1133947832, 978-1305195011, 978-1133947837

More Books

Students also viewed these Finance questions