Chapter 14, Problem 14.8P

Alternative dividend policies Given the earnings per share over the period 201 2-2019 shown in the following table, determine the annual dividend per share under each of the policies set forth in parts a through d.

Year	Earnings per share
2019	$1.40
2018	1.56
2017	1.20
2016	0.85
2015	1.05
2014	0.60
2013	1.00
2012	0.44

1. a. Pay out 50% of earnings in all years with positive earnings.
2. b. Pay $0.50 per share and increase to $0.60 per share whenever earnings per share rise above $0.90 per share for 2 consecutive years.
3. c. Pay $0.50 per share except when earnings exceed $1.00 per share, in which case pay an extra dividend of 60% of earnings above $1.00 per share.
4. d. Combine the policies described in parts b and c. When the dividend is raised (in part b), raise the excess dividend base (in part c) from $1.00 to $1.10 per share.
5. e. Compare and contrast each of the dividend policies described in parts a through d.