Calculate boehms total dividends for 2014

Assignment Help Financial Accounting

Reference no: EM131085998

Use the information for Questions 1 and 2:

Boehm Corporation has had stable earnings growth of 8% a year for the past 10 years and in 2013 Boehm paid dividends of $2.6 million on net income of $9.8 million. However, in 2014 earnings are expected to jump to $12.6 million, and Boehm plans to invest $7.3 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2014 Boehm will return to its previous 8% earnings growth rate. Its target debt ratio is 35%.

Calculate Boehm's total dividends for 2014 under each of the following policies:

1. (a) Its 2014 dividend payment is set to force dividends to grow at the long-run growth rate in earnings.

(b) It continues the 2013 dividend payout ratio. 2.6 million is the dividend for 2013.

2. (a) It uses a pure residual policy with all distributions in the form of dividends (35% of the $7.3 million investment is financed with debt).
2.555 million

(b) It employs a regular-dividend-plus-extras policy, with the regular dividend being based on the long-run growth rate and the extra dividend being set according to the residual policy.

Reference no: EM131085998

Questions Cloud

Determine the mass flow rate of the steam : Determine the mass flow rate of the steam

Differences between local and global marketing : In what facets of marketing strategy and marketing programs do you see the greatest differences between how products are or should be marketed Locally and Globally? Why are these differences important?

Inputs of an and gate : What logic function is obtained by adding an inverter to the inputs of an AND gate?

What is a cumulative particle size distribution : What is a cumulative particle size distribution?

Calculate boehms total dividends for 2014 : Calculate Boehms total dividends for 2014 - It employs a regular-dividend-plus-extras policy, with the regular dividend being based on the long-run growth rate and the extra dividend being set according to the residual policy.

Default ftp and sftp port number : What are the default FTP and SFTP port number? How can we difference between FTP and SFTP?

Possible for a data set : Discuss whether it is possible for a data set to consist only of anomalous objects, or if it is an abuse of the terminology? Cite the sources you use to make your response.

Explain the limitations of this circuit : State the name and purpose of the components shown in the circuit diagram.

Analyze financial accounting tools and techniques : Evaluate management control systems and examine their relationship with accounting and planning, including feedback and non-financial performance measurements.

User Account

All Pages