Question: Early Bird Bakeries Ltd. (EBB) is planning to pay a special dividend per share, over and above its regular quarterly dividend, at the end of

Early Bird Bakeries Ltd. (EBB) is planning to pay a special dividend per share, over and above its regular quarterly dividend, at the end of the fourth quarter of 2012. EBB ended 2009 with retained earnings of $1,240,000.

Required:
Calculate the maximum special dividend per share EBB could pay at the end of the fourth quarter of 2012, assuming a bank covenant prevents retained earnings from falling below $500,000.

Quarterly Dividends Per Share Year 2010 2011 2012 0.25 $0.30 $0.35 Number of Shares Outstanding 600,000 1610,000 1,625,000 Net Income ($000) $3,000,000 $3.200,000 $3,350,000

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