An increase in the firms dividend per share

Assignment Help Financial Management
Reference no: EM131497051

Rio Rubber Corporation follows a strict residual dividend policy. All else equal, which of the following factors would be most likely to lead to an increase in the firm's dividend per share?

A. The company increases the percentage of equity in its target capital structure.

B. The number of profitable potential projects increases.

C. Congress lowers the tax rate on capital gains. The remainder of the tax code is not changed.

D. The firm's net income increases.

E. Earnings are unchanged, but the firm issues new shares of common stock.

Reference no: EM131497051

Questions Cloud

What is their? break-even level of operating income : what is their? break-even level of operating income? (i.e., the level of EBIT where EPS is the same for both? firms)?
Relationship between power and energy : The relationship between W and kWh is the relationship between power (kW) and energy (kWh).
Reduce its cash conversion cycle : Which of the following actions should a firm take if it wants to reduce its cash conversion cycle?
Potential capital budgeting project : You are given the following information for a potential capital budgeting project:
An increase in the firms dividend per share : which of the following factors would be most likely to lead to an increase in the firm's dividend per share?
How much extra income per year would be needed : how much extra income per year would be needed in years 5 through 12 to recover an investment?
What is expected return on the market : Assume these stocks are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-free rate?
Proposed project with a given set of expected cash flows : The ____ the MNC's cost of capital, the ____ will be a project's net present value for its proposed project with a given set of expected cash flows.
Wacc capital budgeting project : XYZ, Inc. is considering a 5 year, 12% WACC capital budgeting project under three scenarios. Calculate the expected NPV of project given abandonment option

Reviews

Write a Review

Financial Management Questions & Answers

  Firm uses straight-line depreciation and borrows funds

Fargo North is considering the purchase of some new equipment costing $69,000. This equipment has a 2-year life after which time it will be worthless. The firm uses straight-line depreciation and borrows funds at a 8 percent rate of interest. The com..

  The current spot rate between euros and dollars

The current spot rate between Euros and dollars is €1.25/$. You believe that the euro will depreciate relative to the dollar over the next six months and you'd like to use the forward market to trade based on your belief. Find your profit/loss on you..

  Investor who requires an 8 percent rate of return

ElVonn, Inc., a decorative firsm issued a $1,000 bond with a coupon rate of 8 percent and 20 years to maturity five years ago. If this bond pays interest semiannually, what is the value of this bond (today) to an investor who requires an 8 percent ra..

  Find the operating cash flow

Find the operating cash flow for the year for Harper Brothers, Inc. if it had sales revenue of $319,800,000, cost of goods sold of $142,200,000, sales and administrative costs of $39,900,000, depreciation expense of $66,400,000, and a tax rate of ..

  Risk-free rate and market risk premium

Stock Y has a beta of 1.2 and an expected return of 13.7 percent. Stock Z has a beta of .8 and an expected return of 9.5 percent. If the risk-free rate is 5.3 percent and the market risk premium is 6.3 percent, the reward-to-risk ratios for stocks Y ..

  Dividends are projected to increase

Diets For You announced today that it will begin paying annual dividends next year. The first dividend will be $0.12 a share. The following dividends will be $0.15, $0.20, $0.50, and $0.60 a share annually for the following 4 years, respectively. Aft..

  Return to equal the quoted yield-to-maturity

For an investor's holding period return to equal the quoted yield-to-maturity, which one of the following must be true?

  Assume debt proceeds are used to repurchase equity

Three Piggies Enterprises has no debt. Its current total value is $75.2 million. Assume debt proceeds are used to repurchase equity. Ignoring taxes, what will the company’s value be if it sells $34.6 million in debt? Suppose now that the company’s ta..

  What marginal cost of capital will it incur to raise

Tiger inc. needs to raise $85,000 to purchase a new machine. Tiger knows its component costs of capital are debt 5%, preferred stock 7%, new equity 13%, and retained earnings 11%. The firm's marginal tax rate is 30 percent. If Tiger expects to genera..

  The value of the peso could reduce your dollar cash flows

You are already aware that a decline in the value of the peso could reduce your dollar cash flows. Yet, according to purchasing power parity, a weak peso should only occur in response to a high level of Mexican inflation, and such high inflation shou..

  Payoff of purchasing an european stock put option

Suppose the current price is $50 per share. The stock price might go up to $80 per share or go down to $20 per share. Can you derive the payoff of purchasing an European stock PUT option with exercise price $50 for one share? Come up with a risk free..

  Calculate the total return on your investment

You purchased one of Big Corp's 8%, 10-year convertible bonds at its $1,000 part value a year ago when the company's common stock was selling for $20. Similar Bonds without conversion feature returned 12% at the time. the bond is convertible into sto..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd