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Dividends, Stock Repurchase and Policy

Calculating the appropriate discount rate

To finance the purchase, Ranch Manufacturing will sell 10-year bonds paying 6.7% per year at the market price of $1,037. Preferred stock paying $1.92 dividend can be sold for $24.22. Common stock for Ranch Manufacturing is currently selling for $55.25 per share and the firm paid a $2.94 dividend last year. Dividends are expected

Average Historical Return and Standard Deviation of Returns

In planning for your retirement, you came across two potential blue-chip stocks i.e. DBS Ltd and Singtel Ltd which you are considering accumulating in your retirement fund. From your research, you noted the historical returns were as follows: Year ABC Return (%) Mango Return (%) 2008 -18.0 21.8

evaluation of capital budgets

1) The managers of United Med tronics are evaluating the following four projects for the coming budget period. The firm's corporate cost of capital is 14 percent. Project Cost IRR A $20,000 17% B $15,000 16% C $12,000 15% D $18,000 13% a. What is the firm's optimal capital budget? b. Now, suppose Medtronic's managers wa

Calculate Dividend Growth Rate

Berry Plc has decided to pay an ordinary dividend per share of £1.60 which it expects to grow at a constant rate of 5% in perpetuity. Assuming the current market price of the company's ordinary share is £28.40 and its opportunity cost of capital is 12½%, calculate the dividend growth rate, g.

Analyzing the impact of interest rate change on prices

Interest Rate Sensitivity A bond trader purchased each of the following bonds at a yield to maturity of 9%. Immediately after she purchased the bonds, interest rates fell to 5%. What is the percentage change in the price of each bond after the decline in interest rates? Fill in the following table. Round your answers to two d

Stocks and Journal Entries

Hello, I have three questions. If you can please provide a solution to all three problems. Question one: both proportional and incremental methods need to be used Dave Matthew Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $100,000. (a) Prepare

Dividend Distribution Policy

How should a firm determine its dividend distribution policy? Discuss three different viewpoints (management, stockholders, and lenders). One paragraph for how to determine a firm's dividend distribution policy. And then one paragraph for each of the three viewpoints: Management, stockholders, and lenders). Brief would be o

Homework Assistance

Corporate governance has become increasingly important over the years. The Sarbanes-Oxley (SOX) Act was enacted to improve transparency in financial accounting and to prevent fraud. Which of the following is correct? a) fraud has not occurred since enactment of SOX b) SOX has not increased auditing costs c)government a

Questions

There are various stakeholders in an organization. The two key stakeholders are the customers and the stockholders. Some financial managers believe that the customer is always right and an organization must do everything possible to win customer delight, thereby gaining a high market share and, subsequently, investor confidence.

Basic financial terms and APT 2-factor models

I have some practice work to complete and I have no idea how to do it. This is in preparation for an exam later. I am doing the practice work in my chapters and need some help understanding. The questions are regarding basic financial terms and an APT 2-factor model.

Cost of Equity using the Dividend Growth Model

I need help understanding the steps of how you go about finding the cost of equity using the dividend growth model for Amazon.com. You do not have to do any calculations; just explain how you would go about doing these calculations and explain what kind of additional information you might need.

Firm's dividend payout ratio and retention ratio

Payout and retention ratio: Drekker, Inc., has revenues of $312,766, costs of $220,222, interest payment of $31,477, and a tax rate of 34 percent. It paid dividends of $34,125 to shareholders. Find the firm's dividend payout ratio and retention ratio

Ratio calculations - balance sheet

Access the information contained in your selected organization's balance sheet and income statement to calculate the following: Liquidity ratios * Current ratio * Acid-test, or quick, ratio * Receivables turnover * Inventory turnover Profitability ratios o Asset turnover o Profit margin o Re

Willing to Pay

How much are you willing to pay for one share of Jumbo Trout stock if the company just paid a $0.70 annual dividend, the dividends increase by 2.5 percent annually, and you require a 10 percent rate of return? How do I do this question? Any help you can give is appreciated, and thank you in advance!

Calculating the Profitability and Liquidity Ratios of Companies

Taking the example of financial statements of any existing company for any two years, perform a ratio analysis using profitability ratios and liquidity ratios. After the calculations of the ratios analyse and comment on your findings of ratios about the profitability and liquidity position of that company. Identify the problem a

Current Vs. Noncurrent Asset Or Liability

-What differentiates a current asset or liability from a noncurrent asset or liability? -Why are accounts receivable listed before inventory on the balance sheet? -Explain what effect the payment of dividends has on net worth? -Explain what effect the repurchase of stock from shareholders has on net worth?

Wyatt Oil: calculating earnings per share (EPS) and current stock price

Wyatt Oil, an all-equity financed firm, has just reported EPS of $4.00 per share. Despite an economic downturn, Wyatt is confident regarding its current investment opportunities, but due to the current financial crisis, Wyatt does not wish to fund these investments externally. Wyatt's board has therefore decided to suspend its s

Transactional Analysis Example Problem

Journal entries for P8.24 transactional analysis a. Sold 5,200 shares of $10 par value preferred stock at $12.50 per share. b. Declared the annual cash dividend of $3.20 per share on common stock. There were 18,400 shares of common stock issued and outstanding throughout the year. c. Issued 6,400 shares of $10 par value

Compare Dividends versus Stock Repurchases

I need assistance analyzing Dividends versus Stock Repurchases of shareholders distribution. What are some of the differences between Dividends versus Stock Repurchases and which one companies/organizations prefer? What are some of the advantages/disadvantages of having each?

Corporate Finance - stock prices, dividends, MM

1. Here are key financial data for House of Herring, Inc.: Earnings per share for 2015 $5.50 Number of shares outstanding 40 million Target payout ratio 50% Planned dividend per share $2.75 Stock price, y/e 2015 $130 House of Herring plans to pay the entire dividend early in January 2016.

Dividend Policy and Optimal Level of Debt

Modigliani and Miller have postulated that dividend policy is basically irrelevant in that if a firm is growing (share value would demonstrate this) then an internal dividend is created and the investor may sell shares to capture this dividend. 1. Do you agree with this statement? Why or why not? 2. What difference might it

A Company's Dividend Policy

Question: Present your own company's dividend policy or research a publicly-held company's dividend policy and summarize your findings. Include whether the company has changed its policy in the last few years. Give your opinion as to why management decided on its particular policy, including market and financial considerations t

Ratio Analysis: Urban Outfitters, Inc.

Perform a ratio analysis on the attached consolidated balance sheet, statements of income, and the consolidated statements of cash flows. Prepare a three year forecast for these three pro-forma statements.

Independent Case for Common Stocks

In each of the following independent cases, it is assumed that the corporation has $400,000 of 6% preferred stock and $1,600,000 of common stock outstanding, each having a par value of $10. No dividends have been declared for 2009 and 2010. (a) As of 12/31/11, it is desired to distribute $250,000 in dividends. How much will the

Prepare a statement of cash flows for Amazing.com

I need assistance preparing a cash flow statement. If you can view it, the attachment presents the following information much clearer. Comparative financial statements for Amazing.com, Inc. follow: 2012 | 2011 Cash: $ 9 | $ 15 Accounts: Receivable 340 | 240 Inventory: 125 |175 Prepaid Insurance: 10 | 6 Property, Pl

Residual Dividend Policy and Borrowing Money to Pay Dividends

A) Discuss the pros and cons of having the directors' formally announce what a firm's dividend policy will be in the future. B) Would it ever be rational for a firm to borrow money in order to pay dividends? Why or why not? C) One position expressed in the financial literature is that firms set their dividends as a resi