J Industries will pay a regular dividend of $3.30 per share for each of the next
ID: 2638370 • Letter: J
Question
J Industries will pay a regular dividend of $3.30 per share for each of the next four years. At the end of four years, the company will also pay out a liquidating dividend. If the discount rate is 10 percent, and the current share price is $69, what must the liquidating dividend be? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
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J Industries will pay a regular dividend of $3.30 per share for each of the next four years. At the end of four years, the company will also pay out a liquidating dividend. If the discount rate is 10 percent, and the current share price is $69, what must the liquidating dividend be? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Explanation / Answer
Liquidating dividend can be distributed to share holders; if the business is going out or when the retained earnings are not positive. Liquidating dividend payment is a type of payment made by the firm during at the time of liquidating the firm. Here the firm will pay a regular dividend amount $3.30 per share for the next 4 years and then the firm would be liquidated. The firm is payout a liquidating dividend at the 4th year ending at the time of liquidation. Here the firm should pay the liquidating from the firm's retained earnings, hence the firm should pay up to $69 as a liquidating dividend.
Therefore, the maximum liquidating dividend payment amount is $69
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