Determining the constant nominal dividend policy


Delta Corp. earned $2.50 per share during fiscal year 2005 and paid cash dividends of $1.00 per share. During the fiscal year that just ended on December 31, 2006, Delta earned $3.00 per share, and the firms managers expect to earn this amount per share during fiscal years 2007 and 2008. What was Delta's payout ratio for fiscal 2005? If Delta's managers want to follow a constant nominal dividend policy, what dividend per share will they declare for 2006? Constant payout for 2007?

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Finance Basics: Determining the constant nominal dividend policy
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