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Alternative dividend policies Over the last 10 years, a firm has had the earnings per share shown in the following table: a. If the firm's dividend policy were based on a constant payout ratio of 40% for all years with positive earnings and 0% otherwise, what would be the annual dividend for 2017? b. If the firm had a dividend payout of $1.00 per share, increasing by $0.10 per share whenever the dividend payout fell below 50% for two consecutive years, what annual dividend would the firm pay in 2017? c. If the firm's policy were to pay $0.50 per share each period except when earnings per share exceed $3.00, when an extra dividend equal to 80% of earnings beyond $3.00 would be paid, what annual dividend would the firm pay in 2017? d. Discuss the pros and cons of each dividend policy described in parts a through c. a. If the firm's dividend policy were based on a constant payout ratio of 40% for all years with positive earnings and 0% otherwise, the annual dividend for 2017 is $0.35 (Round to the nearest cent.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Year 2022 Earnings per share $4.54 Year Earnings per share 2017 $2.84 2021 $4.03 20 S $1.34 2020 $4.28 2015 $1.56 2019 $3.66 2014 -$1.12 2018 $3.47 2013 $0.33 -

Alternative dividend policies Over the last 10 years, a firm has had the earnings per share shown in the following table: a. If the firm's dividend policy were based on a constant payout ratio of 40% for all years with positive earnings and 0% otherwise, what would be the annual dividend for 2017? b. If the firm had a dividend payout of $1.00 per share, increasing by $0.10 per share whenever the dividend payout fell below 50% for two consecutive years, what annual dividend would the firm pay in 2017? c. If the firm's policy were to pay $0.50 per share each period except when earnings per share exceed $3.00, when an extra dividend equal to 80% of earnings beyond $3.00 would be paid, what annual dividend would the firm pay in 2017? d. Discuss the pros and cons of each dividend policy described in parts a through c. a. If the firm's dividend policy were based on a constant payout ratio of 40% for all years with positive earnings and 0% otherwise, the annual dividend for 2017 is $0.35 (Round to the nearest cent.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Year 2022 Earnings per share $4.54 Year Earnings per share 2017 $2.84 2021 $4.03 20 S $1.34 2020 $4.28 2015 $1.56 2019 $3.66 2014 -$1.12 2018 $3.47 2013 $0.33 -

Financial Management: Theory & Practice
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter7: Corporate Valuation And Stock Valuation
Section: Chapter Questions
Problem 18MC
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Alternative dividend policies Over the last 10 years, a firm has had the earnings per share shown in the following table: a. If the firm's dividend policy were based on a constant payout ratio of 40% for all years with positive earnings and 0% otherwise, what would be the annual dividend for 2017? b. If the firm had a dividend payout of $1.00 per share, increasing by $0.10 per share whenever the dividend payout fell below 50% for two consecutive years, what annual dividend would the firm pay in 2017? c. If the firm's policy were to pay $0.50 per share each period except when earnings per share exceed $3.00, when an extra dividend equal to 80% of earnings beyond $3.00 would be paid, what annual dividend would the firm pay in 2017? d. Discuss the pros and cons of each dividend policy described in parts a through c. a. If the firm's dividend policy were based on a constant payout ratio of 40% for all years with positive earnings and 0% otherwise, the annual dividend for 2017 is $0.35 (Round to the nearest cent.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Year 2022 Earnings per share $4.54 Year Earnings per share 2017 $2.84 2021 $4.03 20 S $1.34 2020 $4.28 2015 $1.56 2019 $3.66 2014 -$1.12 2018 $3.47 2013 $0.33 -
Transcribed Image Text:Alternative dividend policies Over the last 10 years, a firm has had the earnings per share shown in the following table: a. If the firm's dividend policy were based on a constant payout ratio of 40% for all years with positive earnings and 0% otherwise, what would be the annual dividend for 2017? b. If the firm had a dividend payout of $1.00 per share, increasing by $0.10 per share whenever the dividend payout fell below 50% for two consecutive years, what annual dividend would the firm pay in 2017? c. If the firm's policy were to pay $0.50 per share each period except when earnings per share exceed $3.00, when an extra dividend equal to 80% of earnings beyond $3.00 would be paid, what annual dividend would the firm pay in 2017? d. Discuss the pros and cons of each dividend policy described in parts a through c. a. If the firm's dividend policy were based on a constant payout ratio of 40% for all years with positive earnings and 0% otherwise, the annual dividend for 2017 is $0.35 (Round to the nearest cent.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Year 2022 Earnings per share $4.54 Year Earnings per share 2017 $2.84 2021 $4.03 20 S $1.34 2020 $4.28 2015 $1.56 2019 $3.66 2014 -$1.12 2018 $3.47 2013 $0.33 -
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