So this is really irritating me.
on practice q 20 in corporate finance under the Aubrey Yacht Manufacturers Case Scenario there’s a q about calculating the future dividends based on some target ratio. now the formula used in the exam versus the book is as usual different.
in the test they use Expected dividend = Previous dividend + ( increase in expected earnings × Target payout ratio – Previous dividend) × Adjustment factor
in the book they use Expected dividend = Previous dividend + ( expected earnings × Target payout ratio – Previous dividend) × Adjustment factor- page 192 book 3.
which one is it?