1. New Age Telecomm is a young, high-growth telecommunications firm. It pays no dividends, though the average dividend payout for other firms in the telecommunications sector is 40 percent. Is New Age paying too little in dividends? Why or why not?
2. The following is a regression of dividend payout ratios on the risk and ln(market capitalization: in millions) of chemical firms:
Dividend Payout Ratio = 0.14 + 0.05 [ln (Market Capitalization in millions)] - 0.1 (Beta) Harman Chemicals has a market capitalization of $1.5 billion and a beta of 1.2. It pays out 22 percent of its earnings as dividends. How does this dividend payout compare to the industry?