question archive The Sharpe Co
The Sharpe Co
Subject:FinancePrice: Bought3
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 $4.83 one year from now.
| a. |
If the adjustment rate is .4 as defined in the Lintner model, what is the dividend one year from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| Dividend | $ |
| b. |
If the adjustment rate is .7 instead, what is the dividend one year from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| Dividend | $ |
| c. | Which adjustment rate is more conservative? | ||||
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