Coppell Timber Company Had Total Earnings Last Year of $5,000,000,but

Essay

Coppell Timber Company had total earnings last year of $5,000,000,but expects total earnings to drop to $4,750,000 this year because of a slump in the housing industry.There are currently 1,000,000 shares of common stock outstanding.The company has $4,000,000 worth of investments to undertake this year.The company finances 40 percent of its investments with debt and 60 percent with equity capital.The company paid $3.00 per share in dividends last year.
a.If the company follows a pure residual dividend policy,how large a dividend will each shareholder receive this year?
b.If the company maintains a constant dividend payout ratio each year,how large a dividend will each shareholder receive this year?
c.If the company follows a constant dollar dividend policy,how large a dividend will each shareholder receive this year?