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    Earnings History

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    A firm has had the following earnings history over the last 5 years:

    year Earnings per share

    1999 $2.50
    1998 $2.00
    1997 $1.75
    1996 $1.25
    1995 -$1.00

    If the firm's dividend policy was to pay $0.25 per share each period except when earnings exceed $1.50, when an extra dividend equal to 50 percent of earnings above $1.50 would be paid, the annual dividends for 1996 and 1999 were _____

    $0.25 and $1.25 respectively, $0.25 and $0.75 respectively, $0 and $0.25 respectively, or $0.25 and $0.25, respectively

    Please advise answer & why.

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    https://brainmass.com/business/accounting/earnings-history-35270

    Solution Summary

    The solution discusses the earnings history.

    $2.49

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