Boehm Corporation has had stable earnings growth of 7% a year for the past 10 years, and in 2019 Boehm paid dividends of $3 million on net income of $5 million. However, net income is expected to grow by 28% in 2020, and Boehm plans to invest $3.0 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2020 Boehm will return to its previous 7% earnings growth rate. Its target debt ratio is 34%. Boehm has 1 million shares of stock. Calculate Boehm's dividend per share for 2020 under each of the following policies: Its 2020 dividend payment is set to force dividends per share to grow at the long-run growth rate in earnings. Round your answer to the nearest cent.

Boehm Corporation has had stable earnings growth of 7% a year for the past 10 years, and in 2019 Boehm paid dividends of $3 million on net income of $5 million. However, net income is expected to grow by 28% in 2020, and Boehm plans to invest $3.0 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2020 Boehm will return to its previous 7% earnings growth rate. Its target debt ratio is 34%. Boehm has 1 million shares of stock. Calculate Boehm's dividend per share for 2020 under each of the following policies: Its 2020 dividend payment is set to force dividends per share to grow at the long-run growth rate in earnings. Round your answer to the nearest cent.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 22P

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Boehm Corporation has had stable earnings growth of 7% a year for the past 10 years, and in 2019 Boehm paid dividends of $3 million on net income of $5 million. However, net income is expected to grow by 28% in 2020, and Boehm plans to invest $3.0 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2020 Boehm will return to its previous 7% earnings growth rate. Its target debt ratio is 34%. Boehm has 1 million shares of stock. Calculate Boehm's dividend per share for 2020 under each of the following policies: Its 2020 dividend payment is set to force dividends per share to grow at the long-run growth rate in earnings. Round your answer to the nearest cent. $ It continues the 2019 dividend payout ratio. Round your answer to the nearest cent. $ It uses a pure residual policy with all distributions in the form of dividends (34% of the $3.0 million investment is financed with debt). Round your answer to the nearest cent. $…
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Boehm Corporation has had stable earnings growth of 9% a year for the past 10 years and in 2018 Boehm paid dividends of $3.7 million on net income of $12.7 million. However, in 2019 earnings are expected to jump to $17.4 million, and Boehm plans to invest $9.398 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2019 Boehm will return to its previous 9% earnings growth rate. Its target debt ratio is 35%. Boehm has 1 million shares of stock. a. Calculate Boehm's dividend per share for 2019 under each of the following policies: 1. Its 2019 dividend payment is set to force dividends per share to grow at the long-run growth rate in earnings. Round your answer to the nearest dollar. $ 2. It continues the 2018 dividend payout ratio. Round intermediate calculations to four decimal places. Round your answer to the nearest dollar. $ 3. It uses a pure residual policy with all distributions in the form of dividends (35% of the $9.398 million…
Boehm Corporation has had stable earnings growth of 7% a year for the past 10 years, and in 2019 Boehm paid dividends of $2 million on net income of $5 million. However, net income is expected to grow by 34% in 2020, and Boehm plans to invest $3.5 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2020 Boehm will return to its previous 7% earnings growth rate. Its target debt ratio is 35%. Boehm has 1 million shares of stock. Calculate Boehm's dividend per share for 2020 under each of the following policies: -Its 2020 dividend payment is set to force dividends per share to grow at the long-run growth rate in earnings. Round your answer to the nearest cent. -It continues the 2019 dividend payout ratio. Round your answer to the nearest cent. -It uses a pure residual policy with all distributions in the form of dividends (35% of the $3.5 million investment is financed with debt). Round your answer to the nearest cent. -It employs a…
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