Effect of increasing the dividend


Whittenburg Corporation has book value per share of $20 and expects earnings per share in the coming year to total $2. it plans to distribute $1 as a dividend to its shareholders. If the required rate of return on shares of comparable beta risk is 15% what would be the effect of increasing the dividend to $1.50, under the whittenburg rule?

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Finance Basics: Effect of increasing the dividend
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