Final earnings estimates for Chilean Health Spa & Fitness Center have been for the CFO of the
Question:
Final earnings estimates for Chilean Health Spa & Fitness Center have been for the CFO of the company and are shown in the following table. The firm has 7,500,000 shares of common stock outstanding. As assistant to the CFO, you are asked to determine the yearly dividend per share to be paid on the following possible policies:
(a) A stable dollar dividend targeted at 40 percent of earnings over a 5-year period.
(b) A small, regular dividend of $0.60 per share plus a year-end extra when the profits in any year exceed $20,000,000. The year-end extra dividend will equal 50 percent of profits exceeding $20,000,000.
(c) A constant dividend payout ratio of 40 percent.
Common StockCommon stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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:
a Computation of the Dividend Targeted Dividend Per share Total Amount Dividend percentage N...View the full answer
Foundations Of Finance
ISBN: 9780135160619
10th Edition
Authors: Arthur J. Keown, John H. Martin, J. William Petty
