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    Distribution Model and Dividend Per Share

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    The Big Corporation expects next year's net income to be $20 million. The firm's debt ratio is currently 30%. Big has $18 million of profitable investment opportunities, and it wishes to maintain its existing debt ratio.

    According to the residual distribution model (assuming all payments are in the form of dividends), how large should Big's dividend payout ratio be next year?

    After a 3-for-2 stock split, the Pittsburgh Company paid a dividend of $1.50 per new share, which represents an 8% increase over last year's pre-split dividend.

    What was last year's dividend per share?

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    https://brainmass.com/business/business-math/distribution-model-dividend-per-share-134583

    Solution Preview

    The Big Corporation expects next year's net income to be $20 million. The firm's debt ratio is currently 30%. Big has $18 million of profitable investment opportunities, and it wishes to maintain its existing debt ratio.

    According to the residual distribution model (assuming all payments are in the form of ...

    Solution Summary

    Distribution Model and Dividend Per Share are investigated.

    $2.19

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