The following table reports (in millions) earnings, dividends, capital expenditures, and R&D for Intel for the period 1990–95: Capital YearNet IncomeDividendsExpendituresR&D1990$650$0$680$5171991819094861819921,067431,22878019932,295881,93397019942,2881002,4411,11119953,5661333,5501,296What are the dividend payout rates for Intel during these years? Is this payout policy consistent with the factors expected to drive dividend policy, as discussed in the chapter? What factors do you expect would lead Intel’s management to increase its dividend payout? How do you expect the stock market to react to such a decision?

The dividend payout proportion seems to be the ratio of the overall amount of dividends given up to…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following table reports (in millions) earnings, dividends, capital expenditures, and R&D for Intel for the period 1990–95:

			Capital
Year	Net Income	Dividends	Expenditures	R&D
1990	$650	$0	$680	$517
1991	819	0	948	618
1992	1,067	43	1,228	780
1993	2,295	88	1,933	970
1994	2,288	100	2,441	1,111
1995	3,566	133	3,550	1,296

What are the dividend payout rates for Intel during these years? Is this payout policy consistent with the factors expected to drive dividend policy, as discussed in the chapter? What factors do you expect would lead Intel’s management to increase its dividend payout? How do you expect the stock market to react to such a decision?

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