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    Dividend Policy

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    ABC Corp. has had the indicated earnings per share (EPS) over the last 3 years:

    Year EPS
    2003 $3.00
    2004 $2.00
    2005 $1.00

    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.

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    https://brainmass.com/business/dividends-stock-repurchase-and-policy/dividend-policy-285039

    Solution Summary

    The solution explains how to calculate the dividend amount under constant payout and fixed dollar payout

    $2.19