Discuss firm could acieve without triggering security issue

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Dividend policy) A firm has 20 million common shares outstanding. It currently pays out $1.50 per share year in cash dividends on its common stock. Historically, its payout ratio has ranged from 30% to 35%. Over the next five years it expects the earnings and discretionary cash flow shown below in millions.

Question 1: A.over the five year period, what is the maxium overall payout ratio the firm could acieve without triggering a securities issue?

Question 2: B. Recommend a reasonable dividend policy for paying out discretionary cash flow in years 1 through 5.

                              1        2        3        4          5     Thereafter

Earnings                    100      125   150      120      140   150+ per year

Discrecreary cash flow 50        70      60       20       15      50+per year

Reference no: EM132452834

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