Question
The Sharpe Co. just paid a dividend of $1.40 per share of stock. Its target payout ratio is 40 percent. The company expects to have
The Sharpe Co. just paid a dividend of $1.40 per share of stock. Its target payout ratio is 40 percent. The company expects to have an earnings per share of $4.95 one year from now. |
a. | If the adjustment rate is .5 as defined in the Lintner model, what is the dividend one year from now? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).) |
Dividend | $ |
b. | If the adjustment rate is .8 instead, what is the dividend one year from now? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).) |
Dividend | $ |
c. | Which adjustment rate is more conservative? | ||||
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