Based on the earnings per share in the period from 2005 to 2012 indicated in the following table, determine the annual dividend per share in accordance with each of the policies described in items a) to d). Year Earnings per share 2012 $ 1.40 2011 1.56 2010 1.20 2009 0.85 2008 1.05 2007 0.60 2006 1.00 2005 0.44 a) Pay 40% of earnings in all years with positive earnings. b) Pay $ 0.60 per share and increase to $ 0.70 when earnings per share rise above $ 0.90 for two consecutive years. c) Pay $ 0.60 per share except when earnings exceed $ 1.00 per share; in that case, an extraordinary dividend of 70% of earnings would be paid in excess of $ 1.00 per share.
Based on the earnings per share in the period from 2005 to 2012 indicated in the following table, determine the annual dividend per share in accordance with each of the policies described in items a) to d).
Year Earnings per share
2012 $ 1.40
2011 1.56
2010 1.20
2009 0.85
2008 1.05
2007 0.60
2006 1.00
2005 0.44
a) Pay 40% of earnings in all years with positive earnings.
b) Pay $ 0.60 per share and increase to $ 0.70 when earnings per share rise above $ 0.90 for two consecutive years.
c) Pay $ 0.60 per share except when earnings exceed $ 1.00 per share; in that case, an extraordinary dividend of 70% of earnings would be paid in excess of $ 1.00 per share.
d) Combine the policies described in sections b) and c). When the dividend increases (in part b), increase the excess basis of the dividend (in part c) from $ 1.00 to $ 1.10 per share.
e) Compare the dividend policies described in items a) to d).
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