CAMZ Co.'s future earnings for the next four years are predicted below. Assuming there are 500,000 shares outstanding common stock, what will be the yearly dividend per share be if the dividend policy is as follows: a. A constant payout ratio of 40% b. A stable peso dividend targeted at 40% of the average earnings over the four year period. c. Small regular dividend of P0.75 plus a year-end extra of 40% of the profits exceeding P1million. d. An annual investment requirement of P1.8 million is to be funded. Capital structure is 50% debt and 50% equity. Residual Dividend policy is establised. Projected annual earnings: 1st year P900,000 2nd year 1,200,000 3rd year 850,000 4th year 1,350,000
CAMZ Co.'s future earnings for the next four years are predicted below. Assuming there are 500,000 shares outstanding common stock, what will be the yearly dividend per share be if the dividend policy is as follows: a. A constant payout ratio of 40% b. A stable peso dividend targeted at 40% of the average earnings over the four year period. c. Small regular dividend of P0.75 plus a year-end extra of 40% of the profits exceeding P1million. d. An annual investment requirement of P1.8 million is to be funded. Capital structure is 50% debt and 50% equity. Residual Dividend policy is establised. Projected annual earnings: 1st year P900,000 2nd year 1,200,000 3rd year 850,000 4th year 1,350,000
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 8P
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CAMZ Co.'s future earnings for the next four years are predicted below. Assuming there are 500,000 shares outstanding common stock, what will be the yearly dividend per share be if the dividend policy is as follows:
a. A constant payout ratio of 40%
b. A stable peso dividend targeted at 40% of the average earnings over the four year period.
c. Small regular dividend of P0.75 plus a year-end extra of 40% of the profits exceeding P1million.
d. An annual investment requirement of P1.8 million is to be funded. Capital structure is 50% debt and 50% equity. Residual Dividend policy is establised.
Projected annual earnings:
| 1st year | P900,000 |
| 2nd year | 1,200,000 |
| 3rd year | 850,000 |
| 4th year | 1,350,000 |
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