Let it B

Let it B E

Suppose that your firm generate net income (net earnings, let it "NI₀ of $20 million this year and usually pay out 30% of its net earnings as dividends. The return on equity is 10%. Let DPR represent the dividend payout ratio (30%). Find out

a. Retained earnings of this year (let it REo)

b. Net income of next year (let it NI1)

c. Dividend of this year (let it Do)

d. Dividenf of next year based on, g =D1

e. Growth Rate of dividend based on, g = D1-D0/D0

f. Growth rate of dividend based on, g = (1-DPR)ROE

g. Are the values from (e) and (f) the same?