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Dividend Payout

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Company Y's earnings have been predicted for the next 5 years and are listed below. There are 1 million shares outstanding, determine the yearly dividend per share to be paid if the following policies are enacted?

Question 1: constant dividend payout ratio of 40 percent
Question 2: stable dollar dividend targeted at 40 percent of the earnings over the 5 year period.
Question 3: Small regular dividend of $0.50 per share, plus a year-end extra when the profits in any year exceed $1,500,000. the year-end extra dividend will equal 50 percent of profits exceeding $1,500,000

Year profits after taxes

Year 1 1,500,000
Year 2 2,000,000
Year 3 1,750,000
Year 4 950,000
Year 5 2,500,000

What I need help with is the formula and run down of the process to figure out this problem, the explicit answer is not necessary

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Solution Preview

1. A constant dividend of 40% is being given. The total dividend will be 40% of the profit after taxes in a year. The dividend per share will be the dividend amount/1,000,000 the number of shares outstanding
Year PAT 40% DPS
1 1,500,000 600,000 0.60
2 2,000,000 800,000 0.80
3 1,750,000 ...

Solution Summary

The solution explains the calculation of dividend amount under different situations

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Walmart: 3 years, Dividend per share, dividend payout

1.What has occurred with Wal Mart's dividend payout, dividend yield, and dividend per share over the past three years (2012-2014)? Do you have any explanations for what has occurred?
2.How does Wal Mart dividend payout, dividend yield, and dividend per share compare to other companies in its industry? Has the company's dividend strategy been similar to other companies in its industry?
3.You are now to use Excel and plot your Wal Mart's earnings and dividends over the past three years. Do you notice any patterns?
4.What is your estimate for Wal Mart's dividend per share next year? Please justify why you made that decision.
5.Would you estimate that Wal Mart has an effective cash management strategy? Why or why not? Please justify your decision.

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