# Dividend Policies From Chapter 13, complete Study Problem 13-4 (DIVIDEND POLICIES) - 88059

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Dividend Policies From Chapter 13, complete Study Problem 13-4 (DIVIDEND POLICIES) The earnings for Crystal Cargo Inc. have been predicted for the next 5 years and are as follows. There are 1 million shares outstanding. Determine the yearly dividend per share to be paid if the following policies are enacted: a. A constant dividend payout ratio of 50 percent b. A stable dollar dividend targeted at 50 percent of the earnings over the 5-year period. c. A small, regular dividend of \$0.50 per share plus a year-end extra when the profits in any year exceed \$1,500,000 The year-end extra dividend will equal 50 percent of profits exceeding \$1,500,000. Year Profits after Taxes 1 \$ 1,400,000 2 \$ 2,000,000 3 \$ 1,860,000 4 \$ 900,000 5 \$ 2,800,000 Determining the yearly dividend per share to be paid: Number of Shares Outstanding = 1,000,000 shares Year Profit after Tax 1 \$1,400,000 2 \$2,000,000 3 \$1,860,000 4 \$900,000 5 \$2,800,000
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