If a stock's earnings per share are $2.00,what will be the dividend per share if the...
If a stock's earnings per share are $2.00,what will be the dividend per share if the payout ratios 40 percent? If the following year's earnings per share are $2.10,what will the payout ratio be if the firm wants to maintain dividend growth of 8 percent?
Homework Answers
Dividend per share = Earnings per share * Payout Ratio
Dividends per share = $2 * 40% = $0.80
Next year dividends = $0.80 * (1 + 8%) = $0.864
Next year, EPS = $2.10
Dividend payout Ratio = $0.864/$2.10 = 41.14%
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