Reference no: EM13927246
The Emco Steel Company has experienced a slow (3 percent per year) but steady increase in earnings per share. The firm has consistently paid out an average of 75 percent of each year's earnings as dividends. The stock market evaluates Emco primarily on the basis of its dividend payout because growth prospects are modest.
Emco's management presents a proposal to the board of directors that would require the outlay of $50 million to build a new plant in the rapidly expanding Florida market. The expected annual return on the investment in this plant is estimated to be in excess of 30 percent, more than twice the current company average. To finance this investment, a number of alternatives are being considered. They include the following:
a. Finance the expansion with externally raised equity.
b. Finance the expansion with 50 percent externally generated equity and 50 percent internally generated equity. This alternative would necessitate a dividend cut for this year only.
c. Finance the expansion with a mix of debt and equity similar to their current relative proportions in the capital structure. Under this alternative, dividends would not be cut. Rather, any equity needs in excess of that which could be provided internally would be raised through a sale of new common stock.
Evaluate these various financing alternatives with reference to their effects on the dividend policy and common stock values of the company.
|
Providing description of the standards movement as is exists
: Identifying and explaining your position in regard to these approaches. Are they contradictory or compatible? Can they be successfully integrated, or are they mutually exclusive?
|
|
Define the term xerophyte
: Identify whether your plant is a C4 or CAM plant. Explain the difference between C4 and CAM plants in relation to the adaptations they have for carrying out photosynthesis that allow them to live in dry, arid environments - Discuss other adaptatio..
|
|
Replacing a hard drive
: The hard drive is among the most essential components of the computer system since it is the area where the whole computer's data is saved for the life of the computer. The following steps are to be used to replace a hard drive:
|
|
Access and read e-mail from government web sites
: He wants to utilize a variety of electronic tablets to access and read e-mail from government web sites (Note: Coast Guard is dual-hatted -Department of Defense and Department of Homeland Security). He has been briefed on a variety of mobile devic..
|
|
Evaluate the various financing alternatives
: Evaluate these various financing alternatives with reference to their effects on the dividend policy and common stock values of the company.
|
|
Register qb student trial edition after installation
: How many days do you have to register QB Student Trial Edition after installation?
|
|
Change in demand and a change in the quantity demanded
: Distinguish between a change in demand and a change in the quantity demanded (movement along the demand curve).
|
|
Announcing contract award and responsibilities
: Imagine that you are working on a project to purchase 5,000 electrical generators with an electrical capacity of three (3) kilowatts and will be used by the U.S. Army for battlefield communications systems.
|
|
Perform a earned value analysis
: During a project, Earned Value Analysis is performed and gives the following numbers:
|