Question

YEAR		PROFITS AFTER TAXES
1		​$17,000,000
2		20,000,000
3		18,000,000
4		22,000,000
5		24,000,000

Dividend

policies​)

Final earnings estimates for Chilean Health Spa​ & Fitness Center have been prepared for the CFO of the company and are shown in the following​ table:

. The firm has

7,600,000

shares of common stock outstanding. As assistant to the​ CFO, you are asked to determine the yearly dividend per share to be paid depending on the following possible​ policies:a. A stable dollar dividend targeted at

50

percent of earnings over a​ 5-year period.b. A​ small, regular dividend of

​$0.70

per share plus a​ year-end extra when the profits in any year exceed

​$19,000,000

The​ year-end extra dividend will equal

60

percent of profits exceeding

​$19,000,000

c. A constant dividend payout ratio of

35

percent.

a. What is the yearly dividend per share to be paid depending on a stable dollar dividend targeted at

50

percent of earnings for years 1 through​ 5?

​$

per share  ​(Round to the nearest​ cent.)

Answer 1