Question: Universal Utilities applies the low regular dividend plus extras policy when determining how much of its income will be paid out as dividends each year.

Universal Utilities applies the low regular dividend plus extras policy when determining how much of its income will be paid out as dividends each year. Universal's policy states that the minimum dividend that will be apid each year is $0.50 per share. But, when net income is greater than $600.000, the total dividend will be increased by 25% of the amount that exceeds $600,000. The firm currently has 100,000 shares of stock outstanding. What will be the dividend per share if Universal earns (a) $760,000 and (b) $580,000?

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