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    Equity Theory

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    Residual theory of dividends: pay dividends if equity is less

    According to the residual theory of dividends, if the firm's equity need is less than the amount of retained earnings, the firm would ___________ borrow to pay the cash dividend, declare a dividend equal to the remaining balance, pay no cash dividends, or not need to consider its dividend policy

    Theories for Raising New Capital

    How do companies decide in practice which route to follow in raising capital? The decision is complex and related to a company's balance sheet, market conditions, outstanding obligations and a host of other factors. Discuss the various factors and theories one should keep in mind while taking these decisions.

    Theories of Capital Structure

    In each of the theories of capital structure, the cost of equity rises as the amount of debt increases. So, why don't financial managers use as little debt as possible to keep the cost of equity down? After all, isn't the goal of the firm to maximize share value (and minimize shareholder costs)?

    Long-Term residual Dividend Policy

    Wells Manufacturing, Inc. has projected its investment opportunities over a 5-year planning horizon. The cost of each year's investment and the amount of internal funds available for reinvestment for that year follow. The firm's debt-equity mix is 40 percent debt and 60 percent equity. There are currently 125,000 shares of commo

    Intro to Finance

    1. Consider the shape of the current Treasury Yield Curve. a. What does the shape of the current curve tell us about the market's expectation of future interest rates? Explain using the liquidity premium theory and the expectation theory. b. What factors might explain the market's expectations about the future interest rates?

    The Effects of a Stock Dividend on a Company's Equity Accounts

    A company with a stock price of $50.00 and the following equity accounts issues a 5% stock dividend. How will the equity accounts change and what will the new stock price be? Common stock @ $1 par value $200,000<br> Additional paid-in capital $1,800,000<br> Retained income $3,000,000<br> Stockholder's equity

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