The Hastings Sugar Corporation has the following pattern of net income each year, and associated capital expenditure
Question:
The Hastings Corporation has 3 million shares outstanding (the following questions are separate from each other).
a. If the marginal principle of retained earnings is applied, how much in total cash dividends will be paid over the five years?
b. If the firm simply uses a payout ratio of 30 percent of net income, how much in total cash dividends will be paid?
c. If the firm pays a 10 percent stock dividend in years 2 through 5, and also pays a cash dividend of $3.40 per share for each of the five years, how much in total dividends will be paid?
d. Assume the payout ratio in each year is to be 20 percent of net income and the firm will pay a 10 percent stock dividend in years 2 through 5. How much will dividends per share for each year be? (Assume cash dividend is paid after the stockdividend).
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen