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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
The Sharpe Co. just paid a dividend of $1.60 per share of stock. Its target payout ratio is 40 percent. The company expects to have an earnings per share of $4.96 one year from now.
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| a. |
If the adjustment rate is .6 as defined in the Lintner model, what is the dividend one year from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
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| b. |
If the adjustment rate is .9 instead, what is the dividend one year from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
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| Â | Â |
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| c. | Which adjustment rate is more conservative 0.6 or 0.9? |
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