Determine the yearly dividend per share to be paid

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The earnings for Crystal Cargo Inc. have been predicted for the next 5 years and are as follows. There are 1 million shares outstanding. Determine the yearly dividend per share to be paid if the following policies are enacted:

a. A constant dividend payout ratio of 50 percent

b. A stable dollar dividend targeted at 50 percent of the earnings over the 5-year period

c. A small, regular dividend of $0.50 per share plus a year-end extra when the profits in any year exceed $1,500,000. The year-end extra dividend will equal 50 percent of profits exceeding $1,500,000.

year Profits after taxes
1 $1,400,000
2 2,000,000
3 1,860,000
4  900,000
5 2,800,000

 

Reference no: EM13298642

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