QUESTION 3 (10 marks) a) You are examining the dividend policy of a large 'blue-chip tech company, Tech-Time Ltd. The following chart shows the company's EPS and DPS from 2014 to 2018 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $- 2015 2017 2018 2014 $1.60 $0.80 -EPS -DPS 2 2016 $4.80 $2.40 $4.20 $2.10 3.6 $1.80 $1.00 1-EPS -DPS What dividend policy does the chart suggest Tech-Time has adopted in the past? (4 marks) b) A successful small-cap growth company, Technotronic Ltd, also operates in the technology industry. It has been generating regular earnings over the same period as Tech-Time, but never pays any cash dividends. Explain this practise of not paying cash dividends based on: (i) the clientele effect (3 marks); AND (ii) dividend signalling theory