Problem - Dividend Policies
The earnings for Crystal Cargo Inc. have been predicted for the next 5 years and are as follows. There are 1 million shares outstanding. Determine the yearly dividend per share to be paid if the following policies are enacted:
a. A constant dividend payout ratio of 50 percent
b. A stable dollar dividend targeted at 50 percent of the earnings over the 5-year period
c. A small, regular dividend of $0.50 per share plus a year-end extra when the profits in any year exceed $1,500,000. The year-end extra dividend will equal 50 percent of profits exceeding $1,500,000.
|
YEAR
|
PROFITS AFTER TAXES
|
|
1
|
$1,400,000
|
|
2
|
2,000,000
|
|
3
|
1,860,000
|
|
4
|
900,000
|
|
5
|
2,800,000
|