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Your goal is to increase your firm's share price. You will do this by changing the dividend payout rate.The dividend payout rate is initially .80
Your goal is to increase your firm's share price. You will do this by changing the dividend payout rate.The dividend payout rate is initially .80 = 80% of income paid out as dividends. Thus your firm's retention rate is .20 = 20% = 1 - .80.Your firm has net income of $10, an initial share price of $60, and return on new investment of .25 = 25%. You cut the dividend payout rate from .80 to.60. There is no change in the return on new investment. Find the initial dividend and r (before you reduce the dividend payout rate)
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