Problem 1
Constant payment ratio and retained earnings: Hannah Brown International maintains a dividend policy with a constant payout ratio of 30 percent. In the last three years, the company had earnings as shown below
Year 1 Year 2 Year 3
Net income ($ million) 30 20 25
What is the total addition to retained earnings over the last three years?
Constant Dollar Dividend Policy: Use the same data given in the problem 1. Now if the company followed a constant dollar dividend policy and paid $10 million in dividend each year, compute the dividend payout ratios for each year and the total addition to retained earnings over the last three years.
Constant payment ratio and retained earnings: Hannah Brown International maintains a dividend policy with a constant payout ratio of 30 percent. In the last three years, the company had earnings as shown below
Year 1 Year 2 Year 3
Net income ($ million) 30 20 25
What is the total addition to retained earnings over the last three years?
Constant Dollar Dividend Policy: Use the same data given in the problem 1. Now if the company followed a constant dollar dividend policy and paid $10 million in dividend each year, compute the dividend payout ratios for each year and the total addition to retained earnings over the last three years.
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