In 2017, Seaworthy Dingys earnings are expected to be $14.4 million, and the firm expects to have
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In 2017, Seaworthy Dingy’s earnings are expected to be $14.4 million, and the firm expects to have profitable investment opportunities of $8.4 million. Last year, the company paid dividends equal to $9 million. It is predicted that Seaworthy will grow at a constant rate of 5 percent in the future. What will be Seaworthy’s total dividends for 2017 if it follows
(a) A policy that requires dividends to grow at the long-run growth rate in earnings
(b) A pure residual dividend policy. Seaworthy’s target debt/assets ratio is 40 percent.
DividendA 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...
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