1. Why do companies buy back their own stock? 2. How does the cost of capital affect a company's capital expenditures? 3. Why would a company issue a stock dividend instead of a cash dividend? 4. What is the relationship between a firm's capital structure and the maximization of shareholders' wealth?
Your company has decided that its capital budget during the coming year will be $20 million. Its optimal capital structure is 60 percent equity and 40 percent debt. Its earnings before interest and taxes (EBIT) are projected to be $34.667 million for the year. The company has $200 million of assets; its average interest rate on
6. The Mori Egg Noodle Company has the following equity accounts on its balance sheet: Common stock ($10 par, 300,000 shares $ 3,000,000 Contributed capital in excess of par 1,500,000 Retained earnings 6,000,000 Total common stockholder's equity $10,500,000 a. What is the maximum amount of dividends that may be pai
An increase in dividends might not increase price and may actually decrease stock price if: A)the dividend increase cannot be sustained. B)the firm does not maintain an exact dividend payout ratio. C)the firm has too much retained earnings. D)markets are weak-form efficient. A policy of dividend "smoothing" r
(See attached file for full problem description) --- 1. Chapter 1 - In terms of the like for the securities offered, what is the difference between money and capital markets? 2. Chapter 15 - Problem 3 Micromanagement, Inc., has 8 million shares of stock outstanding and will report earnings of $20 million in the
I need help creating spreadsheets for the following and explaining assumptions for Perry Ellis. (See attached) Forecast ProForma Statements and Assumptions ? Sales Forecast, Income Statement (spreadsheet) ? Balance Sheet with AFN (spreadsheet) ? Document & explain assumptions Financing plan ? Source of AFN funds
I need help with the following accounting problem: On 12/31/05, Owners' claims to Assets were $300,000, total Liablitlies were 75% of total Assets, Current Assets were 50% of Long Term Assets, and Working Capital was $250,000/ During 2005, The following equity transactions occurred: Reported Net Income Loss $80,000, declared
1.) Should a firm be concerned about signaling effects if it plans to alter its dividend policy? If so, how should signaling be taken into account? 2.) In general, what impact should "clientele effects" have on its dividend policy?
Hi, You have answered my problem 'cost of the capital' and I would like to ask you to help me with one more case if this possible. Here is the new case for dividend policy. Questions to be answered. Please explain the calculations from the spreadsheet or any - I am having a trouble with few questions from the case.
5. Common and preferred stock-issuances and dividends. Permabilt Corp. was incorporated on January 1, 2003, and issued the following stock, for cash: 1,200,000 shares of no-par common stock were authorized; 350,000 shares were issued on January 1, 2003, at $23 per share. 400,000 shares of $100 par value, 10.5% cumulativ
1) Could you describe the characteristics of preferred stock and how it differs from common stock. And explain to me under what circumstances would a firm use prefered stock over common stock. 2) Could you describe the characteristics of a bond and give an example of a bond which exemplifies the following; government, local,
What are the arguments that may arise when discussing : should companies treat dividends as a residual payment to shareholders
-. The present value of five uneven cash flows is $2,145. At a nominal rate of 10 percent compounded annually, what is the fifth payment if payment one if $500, payment two is $600, and payments three and four are $400? a. $245 b. $1,000 c. $500 d. $600 -. Call provisions usually arise when the issuing company want
Shareholders' funds, director's report, long term capital investment policy, interest cover and the dividend cover
7) A business is purchased for $ 125,00 satisfied by a cash payment of $50,000 and a debenture loan of $15,000 and an issue of 30,000 $1 ordinary shares at a premium of 100% Prior to the acquisition the company had the following capital and reserves. ordinary shares of $1 each 100,000 shar
What factors should you consider before deciding which company to buy?what additional data might be helpful to you?(note that net income is implied.) 2)what questions should you ask about the methods used to record revenues and expenses? 3)on the basis of the data provided,which company would you purchase?detail the process yo
Hello, i am trying to figure this problem out. However, one of my classmates presented a vague anwser, please add to it or fix it for us. Question 10. Is repurchasing stock a good alternative to cash dividends (a) on a regular basis and (b) under special conditions? (Note: No large, publicly owned company has ever been chall
Hello need help in solving thei problem. How should investment opportunities influence dividend policy?
This problem must be resolved by an expert in finances. Please give a detailed answers to the questions asked. With the Nike's information do the following: Assume that the company will engage in a major capita acquisition program that is expected to improve EBIT by 10 percent, prepare the following: 1) Calculate the EBIT/E
Credit Policy Problem is attached as a Word Doc. You must show your work and include all Formulas used. Should the firm change its credit policy?
Credit Policy. A firm currently makes only cash sales. It estimates that allowing trade credit on terms of net 30 would increase monthly sales from 200 to 220 units per month. The price per unit is $101 and the cost (in present value terms) is $80. The interest rate is 1 percent per month. a. Should the firm change its c
Sheffield, Inc. predicts that earnings in the coming year will be $20 million. There are 8 million shares, and Sheffield maintains a debt-equity ration of 1.4. A. Calculate the maximum investment funds available without issuing new equity and the increase in borrowing that goes along with it. B. Suppose the firm uses a
Slater Lamp Manufacturing has an outstanding issue of preferred stock with an $80 par value and an 11% annual dividend. a. What is the annual dividend amount (per share)? If it is paid quarterly, how much will be paid each quarter (per share)? b. If the preferred stock is noncumulative and the board of directors has passe
A magazine gave the following estimates for a firm: Beta= 1.15 Dividend per share at date zero= $3.10 Expected Dividend per share in three years from zero= $4.10 Retention rate in three years from zero= 60% ROE in three years from zero= 15% The stock was selling for $49. Estimate the expected returns from purc
Rights issue , required rate of return, dividends, capital gains, maximizing shareholder's wealth, leverage, refinancing, capital structure, cross rate, triangular arbitrage, forward premium, Fisher hypothesis, purchasing power parity.
? The New Word Corporation has 1,000,000 shares outstanding at $30/share. If the firm wishes to raise $13.5 million at a subscription price of $27/share, calculate the value of a right. A) $3/right B) $1/right C) $2/right D) None of the above ? Company X has 100 shares outstanding. It earns $1,000 per year and e
The following data reflect the current financial condition of the Irvine Corporation: Value of debt (Book = Market) $ 1,000,000 Market value of equity $ 5,257,143 Sales, last 12 months $12,000,000 Variable operating costs (50% of sales) $ 6,000,000 Fixed operating costs $ 5,000,000 Tax rate, T (f
If a firm adheres strictly to the residual dividend policy, a sale of new common stock by the firm would suggest that a. the dividend payout ratio has remained constant. b. the dividend payout ratio is increasing. c. no dividends were paid for the year. d. the dividend payout ratio is decreasing. e. the dollar am
How many units were sold in the period? Which correctly describes the amount of dividend? What will the club's Income and Expenditure account show? What is the maximum dividend per share payable from this year's profits? When a shareholder sells some shares for less than he paid for them, what will happen to the shar
At December 31, Tyler Co. has $500,000. of $100 par value, 8% cumulative preferred stock outstanding and $2,000,000. of $10. par value common stock issued. Tyler's net income for the year is $1,000,000. Compute earnings per share of common stock for the year under the following independent situations. A. The dividend to