A financial analyst is attempting to assess the future dividend policy of Environmental Systems by examining its life cycle. She anticipates no payout of earnings in the form of cash dividends during the development stage (1). During the growth stage (II), she anticipates 15 percent of earnings will be distributed as dividends. As the firm progresses to the expansion stage (III), the payout ratio will go up to 33 percent and will eventually reach 57 percent during the maturity stage (IV). a. Assuming earnings per share will be as follows during each of the four stages, indicate the cash dividend per share (if any) during each stage. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your answers to 2 decimal places.) Stage I Stage II Stage III Stage IV Stage I Stage II Stage III Stage IV $ 0.30 1.85 2.60 3.80 Aftertax income Dividends b. Assume in Stage IV that an investor owns 335 shares and is in a 15 percent tax bracket. What will be the investor's aftertax income from the cash dividend? (Do not round intermediate calculations and round your answer to 2 decimal places.)
A financial analyst is attempting to assess the future dividend policy of Environmental Systems by examining its life cycle. She anticipates no payout of earnings in the form of cash dividends during the development stage (1). During the growth stage (II), she anticipates 15 percent of earnings will be distributed as dividends. As the firm progresses to the expansion stage (III), the payout ratio will go up to 33 percent and will eventually reach 57 percent during the maturity stage (IV). a. Assuming earnings per share will be as follows during each of the four stages, indicate the cash dividend per share (if any) during each stage. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your answers to 2 decimal places.) Stage I Stage II Stage III Stage IV Stage I Stage II Stage III Stage IV $ 0.30 1.85 2.60 3.80 Aftertax income Dividends b. Assume in Stage IV that an investor owns 335 shares and is in a 15 percent tax bracket. What will be the investor's aftertax income from the cash dividend? (Do not round intermediate calculations and round your answer to 2 decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A financial analyst is attempting to assess the future dividend policy of Environmental Systems by examining its life cycle. She
anticipates no payout of earnings in the form of cash dividends during the development stage (I). During the growth stage (II),
she anticipates 15 percent of earnings will be distributed as dividends. As the firm progresses to the expansion stage (III), the
payout ratio will go up to 33 percent and will eventually reach 57 percent during the maturity stage (IV).
a. Assuming earnings per share will be as follows during each of the four stages, indicate the cash dividend per share (if any)
during each stage. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations
and round your answers to 2 decimal places.)
Stage I
Stage II
Stage III
Stage IV
Stage I
Stage II
Stage III
Stage IV
$ 0.30
1.85
2.60
3.80
Aftertax income
Dividends
b. Assume in Stage IV that an investor owns 335 shares and is in a 15 percent tax bracket. What will be the investor's aftertax
income from the cash dividend? (Do not round intermediate calculations and round your answer to 2 decimal places.)
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