software and has begun paying cash dividends. The firm’s chief financial officer would like
the firm to distribute 25% of its annual earnings (POR = 0.25) and adjust the dividend
rate to changes in earnings per share at the rate ADJ = 0.75. Regional paid $1.00 per share
in dividends last year. It will earn at least $8.00 per share this year and each year in the foreseeable
future. Use the dividend adjustment model, Equation (18.1), to calculate projected
dividends per share for this year and the next four.