Determine the annual dps under the following policies

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Reference no: EM13833694

a) A company's EPS over the last six years are as follows.

Year	12	11	10	09	08	07
EPS Shs.	27.30	25	22.30	18.40	23.20	21.80

Required:

i) Determine the annual DPS under the following policies.

ii) A regular dividend of sh. 8 and an extra dividend to bring the payout ratio to 40% if it otherwise would fall below.

b) Do you believe it will be justifiable for a company to borrow money to pay dividends? Explain

c) Do you believe it will be justifiable for a company to borrow money to pay dividends? Explain.

d) Briefly explain the pecking order theory and the tradeoff theory of the capital structure.

Reference no: EM13833694

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