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Regional Software: 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 to calculate projected dividends per share for this year and the next four.

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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 ...

Solution Summary

This solution uses the dividend adjustment model to calculate projected dividends per share for this year and the next four years. A plain text response is included with a detailed discussion. Calculations are also shown in an attached Excel spreadsheet. By clicking directly on the cells, you can see what measures were taken to compute the recorded values.

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