Johnson & Johnson. In forecast year 1, Johnson & Johnson will have annual dividends of $2.62, after which dividends will grow at 5.60% per year indefinitely. Your estimates of net profit after tax over forecast years 1-3 are $1,186 million, $1,298 million, and $1,471 million, respectively. Johnson & Johnson has 263 million shares outstanding. What is your estimate of the dividend payout ratio in forecast year 3?

a. 22% to 26%

b. 26% to 30%

c. 30% to 34%

d. 34% to 38%

e. 38% to 42%

f. 42% to 46%

g. 46% to 50%

h. 50% to 54%

i. 54% to 58%

j. 58% to 62%