I determine the annual dps under the following policies ii


a) A company's EPS over the last six years are as follows.

Year

12

11

10

09

08

07

EPS Shs.

27.30

25

22.30

18.40

23.20

21.80

Required:

i) Determine the annual DPS under the following policies.

ii) A regular dividend of sh. 8 and an extra dividend to bring the payout ratio to 40% if it otherwise would fall below.

b) Do you believe it will be justifiable for a company to borrow money to pay dividends? Explain

c) Do you believe it will be justifiable for a company to borrow money to pay dividends? Explain.

d) Briefly explain the pecking order theory and the tradeoff theory of the capital structure.

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Business Management: I determine the annual dps under the following policies ii
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