end? Why? E T will exceed $75,000, which structure Chapter 14--Gitman 202 P14-6 Low-regular and extra dividend policy Bennett Farm Eque highly cydic business. Although the firm has policy Bennett Farm Equipment Sales, Inc., is in a siness. Although the firm has a target payout ratio of 25%, its board Features that strict adherence to that ratio would result in a fluctuating dividend an create uncertainty for the firm's stockholders. Therefore, the firm has declared a reg dend of $0.50 per share per year with extra cash dividends to be paid when carings justify them. Earnings per share for the last several years are as follows: EPS Year 2012 2011 2010 $3.00 2.40 2.20 Year 2009 2008 2007 52.80 2.15 1.97 a. Calculate the puryout ratio for each year on the basis of the regular $0.50 divi dend and the cited EPS. b. Calculate the difference between the regular $0.50 dividend and a 25% 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 25% payout amounts to $1.00 or more. Show the regular and extra dividends in those years when an extra divi dend would 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 cycle but will remain above $2.20 per share in most years. What factors should be considered in making a revision to the amount paid as a regular dividend? If the firm revises the regular dividend, what new amount should it pay