XX operates in the mining industry and has 2 million sharesoutstanding. It is co

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XX operates in the mining industry and has 2 million sharesoutstanding. It is considering two alternative policies:1. A constant payout ratio policy where 60% of earnings are paidout in cash dividends except when a loss is made and2. A low regular and extra policy where a cash dividend of $0.60is paid will be paid each period plus a year end special cashdividend when earnings in a year exceed $3000000. The specialdividend will equal 70% of earnings above $3000000.Earnings are expected to be $4000000 next year and $2000000 theyear after.a) Determine the yearly dividend per share to be paid in each ofthe two years under each of the alternative policies.b) Which of the two policies do you recommend and why?

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