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Thor Company just paid a dividend of $2.50. This year it expects its EPS to be $9.50 and its target ratio to be 30%. Assuming
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Answer #1

Dividend this year = cr*EPS + (1-c)*Dividend last year

where

c= adjustment rate

r= payout rate

hence dividend this year = 0.4*0.3*9.5 + (1-0.4)*2.5

= 1.14+1.5

= $ 2.64

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