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Low-regular-and-extra dividend policy Bennett Farm Equipment Sales, Inc. is in a highly cyclical business. Although the firm has a target payout ratio of 25 %, its board realizes that strict adherence to that ratio would result in a fuctuating dividend and create uncertainty for the firm's stockholders. Therefore, the firm has declared a regular dividend of $0.60 per share per year with extra cash dividends to be paid when earnings justify them. Earnings per share for the last several years are as follows: a. Calculate the payout ratio for each year on the basis of the regular $0.60 dividend and the cited EPS. b. Calculate the difference between the regular $0.60 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. In which year would an extra dividend be paid? What would be done with the "extra" eamings that are not paid out? d. The firm expects that future earnings per share will continue to fluctuate but will remain above $3.61 per share in most years. what factors should be considered in making a revisin to the amount pais as a regular dividend? If the firm revises the regular dividend, what new amount should it pay? a. The payout ratio for year 2014 on the basis of the regular $0.60 dividend and the cited EPS is% (Round to one decimal place.) Enter your answer in the answer box and then click Check Answer Check Answer 13 parts ramaininn Clear All X i Data Table (Click on the icon located on the top-right corner of the data table below n order to copy its contents into a spreadsheet.) EPS Year EPS Year $3.77 $2.29 $1.47 $3.96 2016 2019 $3.65 $3.61 2015 2018 2014 2017 Done Print Low-regular-and-extra dividend pollicy Bennett Farm Equipment Sales, Inc. is in a highly cyclical business. Although the firm has a target payout ratio of 25 %, its board realizes that strict adherence to that ratio would result in a fluctuating dividend and create uncertainty for the firm's stockholders. Therefore, the firm has declared a regular dividend of $0.60 per share per year with extra cash dividends to be paid when earnings justifty them. Eamings per share for the last several years are as follows: E a. Caloulate the payout rabo for each year on the basis of the reqular $0.60 dividend and the cited EPS. b. Caloulate the difference between the regular $0.60 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. In which year would an extra dividend be paid? What would be done with the "extra" eamings that are not paid out? d. The fim expects that future earnings per share will continue to fluctuate but will remain above $3.61 per share in most years. What factors should be considered in making a revisin to the amount pais as a regular dividend? If the fm revises the regular dividend, what new amount should it pay? a. The payout ratio for year 2014 on the basis of the regular 160 dividend and the cited EPS is% (Round to one decimal place.) Enter your answer in the answer box and then click Check Answer. 13 Darts Clear All ramaininn Check Answer 26 Aa
