Company to pay dividends with borrowed money

Assignment Help Financial Management

Reference no: EM131176395

Is it good or bad for a company to pay dividends with borrowed money? Lets say a company has had regular cash dividends to its stockholder for over 50 years. In it's current operating year, the company experienced a severe cash flow crisis. Would it be in the companies best interest to borrow money to pay its dividends?

Reference no: EM131176395

Questions Cloud

Boeing has agreed to pay libor-floating rate side of swap : Boeing has entered into a 10 year interest rate swap with Bank America with a notional principal of $500 million. Boeing has agreed to pay LIBOR – the floating rate side of the swap. Bank America has agreed to pay a fixed rate of 7%. Assume that next..

Make the last of your forty investments : You have forty years until you retire. Today you have no investments. At the end of the year, you will make the first of 40 annual investments of $5,000 in an account that returns 6%, how much will you have on the day that you make the last of your f..

What is the rate of return on this stock : The Frisco Company just paid $2.20 as its annual dividend. The dividends have been increasing at a rate of 4% annually and this trend is expected to continue. The stock is currently selling for $63.60 a share. What is the rate of return on this stock..

What is its operating cash flow : During 2012, Raines Umbrella Corp. had sales of $630,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $470,000, $95,000, and $140,000, respectively. What is Raines’s net income for 2012? What is its operati..

Company to pay dividends with borrowed money : Is it good or bad for a company to pay dividends with borrowed money? Lets say a company has had regular cash dividends to its stockholder for over 50 years. In it's current operating year, the company experienced a severe cash flow crisis. Would it ..

What is the difference in the current prices of these bonds : Two bonds have a coupon rate of 6.5 percent, semi-annual payments, face values of $1,000, and yields to maturity of 7.1 percent. Bond S matures in 6 years and bond L matures in 12 years. What is the difference in the current prices of these bonds?

Portfolio manager in charge of portfolio worth : A portfolio manager in charge of a portfolio worth $10 million is concerned that the market might decline rapidly during the next six months and would like to use options on the S&P 100 to provide protection against the portfolio falling below$9.5 mi..

What is the value the call option : The current price of a non-dividend-paying stock is $30. Over the next six months it is expected to rise to $36 or fall to $26. Assume the risk-free rate is zero. What is the value the call option?

Position in option creates a portfolio that is gamma neutral : A portfolio of derivatives on a stock has a delta of 2400 and a gamma of –100. An option on the stock with a delta of 0.6 and a gamma of 0.04 can be traded. What position in the option creates a portfolio that is gamma neutral?

User Account

All Pages