Question: Delta Corporation earned 2 50 per share during fiscal year 2011

Delta Corporation earned $2.50 per share during fiscal year 2011 and paid cash dividends of $1.00 per share. During the fiscal year that just ended on December 31, 2012, Delta earned $3.00 per share, and the firm’s managers expect to earn this amount per share during fiscal years 2013 and 2014 as well.
a. What was Delta’s payout ratio for fiscal year 2011?
b. If Delta’s managers wish to follow a constant dollar payout dividend policy, what dividend per share will they declare for fiscal year 2012?
c. If Delta’s managers wish to follow a constant payout ratio dividend policy, what dividend per share will they declare for fiscal year 2012?
d. If Delta’s managers wish to follow a partial-adjustment strategy, with a target payout ratio equal to fiscal year 2011’s, how could they change dividend payments during 2012, 2013, and 2014?

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  • CreatedMarch 26, 2015
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