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(Alternative dividend policies) Final earnings estimates for the Smithfield Meat Packing Company have been prepared...

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Finance

(Alternative dividend policies) Final earnings estimates for the Smithfield Meat Packing Company have been prepared for the CFO of the company and are
shown in the following table: . The firm has 7,700,000 shares of common stock outstanding. As assistant to the CFO, you are asked to determine the
yearly dividend per share to be paid depending on the following possible policies:
a. A stable dollar dividend targeted at 60 percent of earnings over a 5-year period.
b. A small, regular dividend of $0.50 per share plus a year-end extra when the profits in any year exceed $21,000,000. The year-end extra dividend will equal
70 percent of profits exceeding $21,000,000.
c. A constant dividend payout ratio of 45 percent.
a. What is the yearly dividend per share to be paid depending on a stable dollar dividend targeted at 60 percent of earnings for years 1 through 5?
$ per share (Round to the nearest cent.)
Data table
(Click on the following icon in order to copy its contents into a spreadsheet)
image

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