BAFB1013 Financial Management

(C) First, compute last year’s earnings per share and dividend payout ratio.
Earnings per share = Earnings / Shares
= 4,500,000/200,000
= 22.5
Dividend payout ratio last year = Dividend per share/ Earning per share
= 2.3/22.5
= 0.1022
Next, if the company maintain this payout ratio, then the dividend amount this year will be = Earnings *
Dividend payout ratio the dividend amount this year will be = 4,800,000*0.1022
= 490,667. So, The dividend
per share this year will be = 490,667/200,000 shares
= 2.45