Abel Inc Applies the Low Regular Dividend Plus Extras Policy When

question 14

Multiple Choice

Abel Inc. applies the low regular dividend plus extras policy when determining how much of its income will be paid out as dividends each year. Abel's policy states that the minimum dividend that will be paid each year is $1.00 per share. But, when net income is greater than $80 million, the total dividend will be increased by 40 percent of the amount that exceeds $60 million. The firm currently has 10 million shares of stock outstanding. What will be the dividend per share if Abel earns $100 million?

• A)$2.60
• B)$1.80
• C)$1.00
• D)$5.00
• E)$3.00

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