B2. (Dividend Policy) A firm has 20 million common shares outstanding. It curren

B2. (Dividend Policy) A firm has 20 million common shares outstanding. It currently pays out $1.50B2. Dividend Policy A firm has 20 millionCorporate Financial Management (3rd Edition):Emery Douglas R. Finnerty John D. & Stowe John D. (2007) Individual assignment: Text Problem SetB2.
(Dividend Policy) A firm has 20 million common shares outstanding. It
currently pays out $1.50 per share per year in cash dividends on its
common stock. Historically its payout ratio has ranged from 30% to 35%.
Over the next five years it expects the earnings and discretionary cash
flow shown below in mill ions. a.
Over the five-year period what is the maximum overall payout ratio the
firm could achieve without triggering a securities issue?b. Recommend a reasonable dividend policy for paying out discretionary cash flow in years 1 through 5.1 2 3 4 5 THEREAFTER Earnings 100 125 150 120 140 150+per year Discretionary cash flow50 70 60 20 15 50+per year