Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Textbook Question
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 |
- a. Pay out 50% of earnings in all years with positive earnings.
- 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.
- 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.
- 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.
- e. Compare and contrast each of the dividend policies described in parts a through d.
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The following information was available for the year ended December 31, 2022 Dividende per share Earnings per share Market price per share at year and 1.35 Required: a. Calculate the price/earrings ratio for 2022. Note: Round your answer to 2 decimal places. b. Calculate the dividend payout ratio for 2022 Note: Round your percentage answer to 2 decimal places (La, 9.1234 should be entered as c. Calculate the dividend yield for 2022. Note: Round your percentage answer to 2 decimal places (.a., 0.1234 should be entered as 12.34) Price/Eaming ratio b. Dividend payout ratio c. Dividend yield
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Dividends per share
Earnings per share
1.35
3.00
28.20
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a. Calculate the price/earnings ratio for 2022.
Note: Round your answer to 2 decimal places.
b. Calculate the dividend payout ratio for 2022.
Note: Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).
c. Calculate the dividend yield for 2022.
Note: Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).
a. Price/Earning ratio
b. Dividend payout ratio
c. Dividend yield
%
Ji di
%
if a dividend in 2018 was $1.20 per share and in 2019 dividend was $1.70 per share
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О а. 41.6%
ь. 12%
O c. 20%
O d. 1.70%
4
Chapter 14 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 14.1 - What two ways can firms distribute cash to...Ch. 14.1 - Why do rapidly growing firms generally pay no...Ch. 14.1 - The dividend payout ratio equals dividends paid...Ch. 14.2 - Prob. 14.4RQCh. 14.2 - Prob. 14.5RQCh. 14.2 - What benefit is available to participants in a...Ch. 14.3 - Does following the residual theory of dividends...Ch. 14.3 - Contrast the basic arguments about dividend policy...Ch. 14.4 - Prob. 14.9RQCh. 14.5 - Describe a constant-payout-ratio dividend policy,...
Ch. 14.6 - Why do firms issue stock dividends? Comment on the...Ch. 14.6 - Compare a stock split with a stock dividend.Ch. 14 - Prob. 1ORCh. 14 - Prob. 14.1STPCh. 14 - Prob. 14.1WUECh. 14 - Prob. 14.2WUECh. 14 - Prob. 14.3WUECh. 14 - Prob. 14.4WUECh. 14 - Prob. 14.5WUECh. 14 - Dividend payment procedures At the quarterly...Ch. 14 - Prob. 14.2PCh. 14 - Prob. 14.3PCh. 14 - Dividend constraints The Howe Companys...Ch. 14 - Prob. 14.5PCh. 14 - Low-regular-and-extra dividend policy Bennett Farm...Ch. 14 - Alternative dividend policies Over the past 10...Ch. 14 - Alternative dividend policies Given the earnings...Ch. 14 - Stock dividend: Firm Columbia Paper has the...Ch. 14 - Cash versus stock dividend Milwaukee Tool has the...Ch. 14 - Stock dividend: Investor Sarah Warren currently...Ch. 14 - Stock dividend: Investor Security Data Company has...Ch. 14 - Stock split: Firm Growth Industries current...Ch. 14 - Prob. 14.14PCh. 14 - Stock split versus stock dividend: Firm Mammoth...Ch. 14 - Prob. 14.16PCh. 14 - Prob. 14.17PCh. 14 - Prob. 14.18PCh. 14 - Prob. 14.19P
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