Slate Rock and Gravel Co. sets its dividend using the target payout ra

Slate Rock and Gravel Co. sets its dividend using the target payout ratio policy. Selected financial data for Slate is available in the table below.

What dividend should Slate Rock and Gravel offer for the coming year (Year 2 ) if it uses an adjustment factor of 1.0?

Selected Financial Information
Slate Rock and Gravel Co.
Year 1
Dividend per share (Year 1 ) $0.55
Target payout ratio 20%
Earnings per share (Year 1 ) $1.80
Earnings per share (Year 2 ) $2.15

A) $0.55
B) $0.62
C) $0.90
D) $0.93
E) $1.00

ANSWER

B