Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please show work and have all answers correct please and i will upvote! Boehm Corporation has had stable earnings growth of 4% a year for

please show work and have all answers correct please and i will upvote!
image text in transcribed
Boehm Corporation has had stable earnings growth of 4% a year for the past 10 years and in 2018 Boehm paid dividends of $2.0 million on net income of $10.4 million. However in 2019 earnings are expected to jump to $12.8 million, and Boehm plans to invest $7.592 million in a plant expansion. This one-time unusual cornings growth won't be maintained, though, and after 2019 Boehm will return to its previous 4% earnings growth rate. Its target debt ratio is 35%. Boehm has 1 million shares of stock a. Calculate Bloem's dividend per share for 2019 under each of the folowing policies 1. Its 2019 dividend payment is set to force dividends per share to grow at the long-run growth rate in carnings. Round your answer to the nearest dollar $ 2. It continues the 2018 dividend payout ratio. Round intermediate calculations to four decimal places. Round your answer to the nearest dollar 3. It uses a pure residual policy with all distributions in the form of dividends (35% of the $7.592 million investment is financed with debe), Round your answer to the nearest dollar $ $ 4. It employs a regular-dividend-plus-extras palicy, with the regular dividend being based on the long-run growth rate and the extra dividend being set according to the residual policy. What will the extra dividend be? Round your answer to the nearest dollar $ 1. Which of the preceding policies would you recommend? -Select Does a 2019 dividend of $7 million seem reasonable in view of your answers to parts a and b? If not, should the dividend be higher or lower? 1 Yes. As a regular dividend it should be equal to $7 million 11. No. As a regular dividend it should be higher than $7 million III. No. As a regular dividend it should be lower than $7 million -Select

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_2

Step: 3

blur-text-image_3

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

Cash Confident An Entrepreneurs Guide To Creating A Profitable Business

Authors: Melissa Houston

1st Edition

1637586361, 978-1637586365

More Books

Students also viewed these Finance questions