A firm has cash flow from operations of $80 million and needs $72 million for investment purposes, leaving $8 million of free cash flow. Assume the firm has 8 million shares outstanding and its shares are presently trading at $30 per share. If the firm were all equity financed and the firm followed a strict residual dividend policy, how much would it pay out in dividends per share?

$1 per share

$4 per share

$3 per share

$5 per share

Answer rating: 100% (QA)

So the Formulae for calculating the same would be Cash flow from operations Capi... View the full answer