Resorts Int'l pays dividends to its stockholders according to an 70% target dividend payout ratio. It...

 

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Resorts Int'l pays dividends to its stockholders according to an 70% target dividend payout ratio. It has just paid a $3.50 dividend on each share. In one year, the company expects its earnings per share to be better that their current level and equal $9.00. The speed of the adjustment coefficient is 0.75 (see "Lintner's dividend smoothing model"). QUESTIONS: Compared to the just paid dividend, in one year Resorts Int'l will increase its per-share dividend by $ [Select] year after year in the future, then the dividend it will be paying on each share will be slowly approaching its new target level of $ [Select] In other words, it'll pay $ [Select] per share. I Resorts Int'l pays dividends to its stockholders according to an 70% target dividend payout ratio. It has just paid a $3.50 dividend on each share. In one year, the company expects its earnings per share to be better that their current level and equal $9.00. The speed of the adjustment coefficient is 0.75 (see "Lintner's dividend smoothing model"). QUESTIONS: Compared to the just paid dividend, in one year Resorts Int'l will increase its per-share dividend by $ [Select] year after year in the future, then the dividend it will be paying on each share will be slowly approaching its new target level of $ [Select] In other words, it'll pay $ [Select] per share. I

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The question refers to Lintners dividend smoothing model which attempts to predict the behavior of d... View the full answer