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Assume that today is 1/1/19. High Tech Chip Company is expected to have net income per share (earnings per share) of $64 in 2022.

Assume that today is 1/1/19. High Tech Chip Company is expected to have net income per share (earnings per share) of $64 in 2022. What do you expect the dividend to be in 2022? Assume that the payout ratio in the future will be the same as it has been in the past.

EPS in 2014 =   $10                                 Dividend paid per share in 2014 =     $7

EPS in 2015 =   $20                                 Dividend paid per share in 2015 =     $14

EPS in 2016 =   $22                                 Dividend paid per share in 2016 =    $15.4

EPS in 2017 =    $24                                Dividend paid per share in 2017 =    $ 16.8

What will the dividend be (per share) in 2022?

Please put your answer on the blank line on the answer sheet. Please record your answer in dollars and cents.

Solutions

Expert Solution

In the question, Expected EPS of year 2022 is given as $64.

if payout ratio remains the same, then Dividend per share for Year 2022 would be =$64*70%= $44.8 per share

Calculation for Payout ratio is given below:

Year EPS Dividend per share Payout ratio(DPS/EPS*100)
2014 $10 $7 70.00%
2015 $20 $14 70.00%
2016 $22 $15.40 70.00%
2017 $24 $16.80 70.00%

jeff jeffy answered 2 years ago
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