Hixton Farms has a target payout ratio of 50%. Dividends paid last year amounted to $10 million.

Question:

Hixton Farms has a target payout ratio of 50%. Dividends paid last year amounted to $10 million. Its earnings were $20 million. Hixton's "speed of adjustment" factor for dividends is 60%. What will be its payments over the next live years if its earnings display the following path:
Year Earnings
1.................................$30 million
2.................................35 million
3.................................30 million
4.................................25 million
5.................................30 million
Draw a graph of Hixton's actual dividends paid versus the desired pay¬ments during this five-year period.
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...