ABC Corp. has had the indicated earnings per share (EPS) over the last 3 years:
a) If the company's dividend policy was based on a constant payout ratio of 50%, determine the annual dividend for each year.
b) If the firm's dividend policy was based on a fixed dollar payout policy of 50 cents per share plus an extra dividend equal to 75% of earnings per share above $1.00, determine the annual dividend for each year.
c) Show all work.
The solution explains how to calculate the dividend amount under constant payout and fixed dollar payout