Delta Corporation earned $2.50 per share during fiscal year 2011 and paid cash dividends of $1.00 per

Question:

Delta 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 policy, what per share will they declare for fiscal year 2012?
c. If Delta’s managers wish to follow a constant payout ratio policy, what 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 payments during 2012, 2013, and 2014?
Corporation
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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...