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Calculation of Projected Dividends

Calculation of Projected Dividends

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(Dividend adjustment model) Regional Software has made a bundle selling spreadsheet software and has begun paying cash dividends. The firm’s chief financial officer would like the firm to distribute 25% of its annual earnings (POR = 0.25) and adjust the dividend rate to changes in earnings per share at the rate ADJ = 0.75. Regional paid $1.00 per share in dividends last year. It will earn at least $8.00 per share this year and each year in the foreseeable future. Use the dividend adjustment model, Equation (18.1), to calculate projected dividends per share for this year and the next four.
(Dividend adjustment model) Regional Software has made a bundle selling spreadsheet software and has begun paying cash dividends. The firm’s chief financial officer would like the firm to distribute 25% of its annual earnings (POR = 0.25) and adjust the dividend rate to changes in earnings per share at the rate ADJ = 0.75. Regional paid $1.00 per share in dividends last year. It will earn at least $8.00 per share this year and each year in the foreseeable future. Use the dividend adjustment model, Equation (18.1), to calculate projected dividends per share for this year and the next four.

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The firm’s chief financial officer would like the firm to distribute 25% of its annual earnings (POR = 0. Equation (18.25) and adjust the dividend rate to changes in earnings per share at the rate ADJ = 0. Regional paid $1.classof1.75.00 per share in dividends last year. Use the dividend adjustment model.1). . It will earn at least $8. Equation 18.com/homework-help/finance *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for submitting the same in lieu of their academic submissions for grades. to calculate projected dividends per share for this year and the next four.Sub: Finance Question: Calculation of Projected Dividends Topic: Dividend Policy (Dividend adjustment model) Regional Software has made a bundle selling spreadsheet software and has begun paying cash dividends.00 per share this year and each year in the foreseeable future.1 www.

classof1.00 8.00 8.00 1.1.00 8. . DPS₁ .DPS₀ = ADJ [ POR (EPS₁) -DPS₀] where. DPS n = ADJ [ POR (EPS n) -DPS(n-1)]+DPS(n-1) Given. DPS₀ = ADJ = POR = EPS₁ = EPS₂ = EPS₃ = EPS₄ = $ 0.25 $ $ $ $ 8. DPSn -DPS(n-1) = ADJ [ POR (EPS n) -DPS(n-1)] Or.com/homework-help/finance *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for submitting the same in lieu of their academic submissions for grades.74 0. DPS₁ = Dividend per share next year DPS₀ = Current dividend per share ADJ = Adjustment Factor POR = Payout ratio EPS₁ = Earnings per share next year EPS₀ = Current EPS So.Sub: Finance Solution : Topic: Dividend Policy As per the equation 18.00 www.

93 = $ 1.74= $ 1.com/homework-help/finance *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for submitting the same in lieu of their academic submissions for grades.25(8)-1.74[0.98 = $ 2.93]+1. DPS₁ = ADJ [ POR (EPS₁) -DPS₀]+DPSⁿ₀) so.74[0.25(8)-1]+1 = DPS₂ = ADJ [ POR (EPS₂) -DPS₁]+DPS₁) DPS₂ = 0.98]+1. DPS₁ = 0.74 Topic: Dividend Policy DPS₃ = ADJ [ POR (EPS₃) -DPS₂]+DPS₂) DPS₃ = 0.74[0.74]+1.00 www.98 DPS ₄= ADJ [ POR (EPS₄) -DPS₃]+DPS₃ DPS₄ = 0. .74[0.Sub: Finance Using he above formula.classof1.25(8)-1.25(8)-1.93 $ 1.

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