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    Dividend adjustment model

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    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.

    © BrainMass Inc. brainmass.com October 9, 2019, 11:43 pm ad1c9bdddf
    https://brainmass.com/business/accounting-for-corporations/dividend-adjustment-model-265579

    Solution Preview

    Dividends for the year = adjustment rate * target payout rate*year's earnings + (1-adjustment rate)*Dividend paid last year
    For this ...

    Solution Summary

    The solution examines the dividend adjustment model. The projected dividends per share for this year and the next four are calculated.

    $2.19