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Southern Cities Trucking Company has the following five-year record of earnings per share. Year EPS 2012...

Southern Cities Trucking Company has the following five-year record of earnings

per share.

Year EPS

2012 $1.40

2013 $2.10

2014 $1.00

2015 $3.25

2016 $0.80

Which of the following procedures would produce higher dividends to stockholders over this

five-year period?

a. Paying out dividends at a fixed ratio of 40% of EPS

b. Paying out dividends at a fixed rate of $1 per share

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Answer #1

Calculate the dividend paid as follows:

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