In 2015 seaworthy dingys earnings are expected to be 144


In 2015, Seaworthy Dingy's earnings are expected to be $14.4 million, and the firm expects to have profitable investment opportunities of $8.4 million. Last year, the company paid dividends equal to $9 million. It is predicted that Seaworthy will grow at a constant 5 percent in the future. What will be Seaworthy's total dividends for 2015 if it follows

(a) a policy that requires dividends to grow at the long-run growth rate in earnings and

(b) a pure residual dividend policy. Seaworthy's target debt/assets ratio is 40 percent.

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Finance Basics: In 2015 seaworthy dingys earnings are expected to be 144
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