Smathers Jellies Follows a Residual Dividend Policy and Maintains a Constant

question 285

Multiple Choice

Smathers Jellies follows a residual dividend policy and maintains a constant debt-equity ratio. There are 15,000 shares of stock outstanding at a market price of $10 a share. There are 300 bonds
Outstanding, which are selling at par value. The projected spending on capital projects is $180,000
For next year. Earnings for next year are estimated at $70,000. What is the projected dividend
Amount per share?

• A) $0
• B) $.33
• C) $.50
• D) $.67
• E) $1.00

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