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