The Sharpe Company just paid a dividend of $$1\mathrm{.}40$ per share of stock. Its target payout

ratio is $40$ percent. The company expects to have earnings per share of $$4\mathrm{.}95$ one year

from now.

a$.$ If the adjustment rate is $\mathrm{.}5$ as defined in the Lintner model, what is the dividend one

year from now? $($Do not round intermediate calculations and round your answer to

$2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$ If the adjustment rate is $\mathrm{.}8$ instead, what is the dividend one year from now? $($Do not

round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,$

$32\mathrm{.}16.)$

a$.$ Dividend

b$.$ Dividend

c$.$ Which adjustment rate is more conservative?

$\mathrm{.}5$

$\mathrm{.}8$