# dividends

Please help with the following problem.

3M pays quarterly cash dividends on its common stock. Suppose 3M forecasts earnings per share of $4.00 this year and $3.80, $3.20, $4.80,and $4.08 over the following four years, respectively, and believes it can maintain a long-term payout ratio of 1/4. 3M revises its dividends once per year, and the quarter dividend is one-fourth of the annual dividend. Which of the following annual dividend patterns would you recommend?

1. $2.00, $1.05, $0.85, $1.45, $1.25

2. $1.20, $1.00, $0.75, $0.95, $1.40

3. $1.00, $0.95, $0.80, $1.20, $1.02

4. $0.80. $0.80, $0.95, $1.00, $1.05

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#### Solution Preview

Problem: 3M pays quarterly cash dividends on its common stock. Suppose 3M forecasts earnings per share of $4.00 this year and $3.80, $3.20, $4.80,and $4.08 over the following four years, respectively, and believes it can maintain a long-term payout ratio of 1/4. 3M revises its dividends ...

#### Solution Summary

This solution helps with various problems involving calculations with dividends. Calculations are given along with explanations.