medium · Principles of Finance cost-of-capital-structure
A firm follows the Lintner model for dividend setting. Last year's dividend was 1.00. This year, EPS increased to 4.00.
If the target payout ratio is 40% and the speed of adjustment coefficient is 0.5, what is the new dividend?
- $1.50
- $1.30
- $1.15
- $1.60
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