# Why 11 over the last 10 years a firm had the eps

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In the real world which of these actions would you recommend? Why? 11 Over the last 10 years, a firm had the EPS shown in the following table: Year EPS Year EPS 2007 \$0.25 2012 \$3.20 2008 -\$0.50 2013 \$2.80 2009 \$1.80 2014 \$3.20 2010 \$1.20 2015 \$3.80 2011 \$2.40 2016 \$4.00 a) If the firm’s dividend policy were based on a constant payout ratio of 40% for all the years with positive earnings and 0% otherwise, what would be the annual dividend for each year? b) If the firm had a dividend payout of \$1.0 per share, increasing by \$0.10 per share whenever the dividend payout fell below 50% for 2 consecutive years, what annual dividend would the firm pay every yr? c) If the firm’s policy were to pay \$0.50 per share each period except when EPS exceed \$3.0, when an extra dividend equal to 80% of earnings beyond \$3.0 would be paid, what annual dividend would the firm pay each year?
Corporate Finance - 2018 Suresh Herur 12 Given the EPS over the period 2009-2016 shown in the following table, determine the annual dividend per share for each of the policies Year EPS Year EPS 2009 \$0.44 2013 -\$0.85 2010 \$1.00 2014 \$1.20 2011 \$0.60 2015 \$1.56 2012 \$1.05 2016 \$1.40 a) Payout 50% of the earnings in all years with positive earnings b) Pay \$0.50 per share and increase to \$0.60 per share whenever EPS rises above \$0.90 per share for 2 consecutive years c) Pay \$0.50 per share except when EPS \$1.0, in which case pay an extra dividend of 60% of earnings above \$1.0 per share 13 Mammoth Corp. is considering a 3 for 2 stock split. It currently has the stockholders’ equity position shown. The current stock price is \$120 per share. The most recent period’s earnings available for common stock is included in retained earnings. a) What effects on Mammoth would result from the stock split? b) What change in stock price would you expect to result from the stock split? c) What is the max. cash dividend per share that the firm could pay on common stock before and after the stock split? d) Construct your answers to parts a and b with the circumstances surrounding a 50% stock dividend 14 The following financial data on the Bond Recording Co. are available: The firm is currently considering whether it should use \$400,000 of its earnings to pay cash dividends of \$ 1 per share or to repurchase stock at \$21 per share a)

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• Fall '19
• Dividend, Dividend yield, P/E ratio

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