How large should dividend payout ratio be next year

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Problem 1: The company had a 40% dividend payout ratio in 2008. If Bowles wants to maintain this payout ratio in 2009, what will be its per-share dividend in 2009? If the company maintains this 40% payout ratio, what will be the current dividend yield on the company s stock?

Problem 2: If the company expects next year net income to be $1.5 million. The firm's debt ratio is currently 40 percent. OGS has million of profitable investment opportunities, and it wishes to maintain its existing debt ratio. According to the residual dividend model, how large should dividend payout ratio be next year? Assume the firm uses only debt and com mon equity in its capital structure.

Reference no: EM132941805

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