Disney currently has 5 million common stock shares outstanding. Over the next 3 years, the firm anticipates capital expenditures that will lead to volatility in discretionary cash flow. From Year 4 on, however, the firm anticipates stable income and discretionary cash flows. You have the following forecasts of management available:

0

0

0

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0

0

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Last year's (Year 0's) dividend was $0.75 per share. Which of the following is the optimal dividend policy for this firm for Years 1-3 and 4+ based on the best practices we have studied? (DPS(t) = Dividend Per Share in Year t.)

To answer this question, you may find the following table helpful in framing your analysis:

(chart attached, answers below