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The Hastings Sugar Corporation has the following pattern of net income each year, and associated capital expenditure projects. The firm can earn a higher return
The Hastings Sugar Corporation has the following pattern of net income each year, and associated capital expenditure projects. The firm can earn a higher return on the projects than the stockholders could earn if the funds were raid out in the form of dividends. AWN Net Income $12 million 15 million 11 million 15 million 15 million Profitable Capital Expenditure $ 7 million 12 million 7 million 7 million 8 million The Hastings Corporation has 2 million shares outstanding. (The following questions are separate from each other) a. If the marginal principle of retained earnings is applied, how much in total cash dividends will be paid over the five years2 (Enter your answer in millions.) b. If the firm simply uses a payout ratio of 40 percent of net income, how much in total cash dividends will be gaid? (Enter your answer in millions and round your answer to 1 decimal place.) c. If the firm pays a 10 percent stock dividend in years 2 through 5, and also pays a cash dividend of $2.40 per share for each of the five years, how much in total dividends will be paid? d. Assume the Rayout ratio in each year is to be 21 percent of the net income and the firm will sava 10 percent stack dividend in years. 2 through 5. how much will dividends.per share for each year be? (Assume the cash dividend is. Raid after the stock dividend.) (Round your answers to 2 decimal places.) Year Dividends per Share AN
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