Find the firms dividend payout ratio and retention ratio

Assignment Help Financial Econometrics

Reference no: EM13327246

What decision criteria should managers use in selecting projects when there is not enough capital to invest in all available positive NPV projects?

The profitability index.

The internal rate of return.

The discounted payback.

The modified internal rate of return.

How firms estimate their cost of capital: The WACC for a firm is 13.00 percent. You know that the firm's cost of debt capital is 10 percent and the cost of equity capital is 20%. What proportion of the firm is financed with debt?

70%

33%

50%

30%

If a company's weighted average cost of capital is less than the required return on equity, then the firm:

Has debt in its capital structure

Is perceived to be safe

Must have preferred stock in its capital structure

Is financed with more than 50% debt

The cost of equity: Gangland Water Guns, Inc., is expected to pay a dividend of $2.10 one year from today. If the firm's growth in dividends is expected to remain at a flat 3 percent forever, then what is the cost of equity capital for Gangland if the price of its common shares is currently $17.50?

12.00%

14.65%

15.00%

15.36%

A firm's capital structure is the mix of financial securities used to finance its activities and can include all of the following except

stock.

bonds.

equity options.

preferred stock.

M&M Proposition 1: Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You currently own 10 percent of the stock.

If Dynamo wishes to change its capital structure from 75 percent to 60 percent equity and use the debt proceeds to pay a special dividend to shareholders, how much debt should they issue?

$600

$225

$321

$375

Multiple Analysis: Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its depreciation and amortization expenses amounted to $84 million. The firm has 135 million shares outstanding and a share price of $12.80. A competing firm that is very similar to Turnbull has an enterprise value/EBITDA multiple of 5.40.

what is the enterprise value of Turnbull Corp.? Round to the nearest million dollars.

$453.6 million

$1,787 million

$1,334 million

$1,315 million

External financing needed: Jockey Company has total assets worth $4,417,665. At year-end it will have net income of $2,771,342 and pay out 60 percent as dividends. If the firm wants no external financing, what is the growth rate it can support?

25.1%

30.3%

27.3%

32.9%

Which of the following cannot be engaged in managing the business?

none of these

a general partner

a sole proprietor

a limited partner

Which of the following does maximizing shareholder wealth not usually account for?

Risk.

Government regulation.

The timing of cash flows.

Amount of Cash flows.

The strategic plan does NOT identify

the lines of business a firm will compete in.

major areas of investment in real assets.

future mergers, alliances, and divestitures.

working capital strategies.

Firms that achieve higher growth rates without seeking external financing

are highly leveraged.

none of these.

have less equity and/or are able to generate high net income leading to a high ROE.

have a low plowback ratio.

Payout and retention ratio: Drekker, Inc., has revenues of $312,766, costs of $220,222, interest payment of $31,477, and a tax rate of 34 percent. It paid dividends of $34,125 to shareholders. Find the firm's dividend payout ratio and retention ratio.

15%, 85%

55%, 45%

85%, 15%

45%, 55%

The cash conversion cycle

shows how long the firm keeps its inventory before selling it.

estimates how long it takes on average for the firm to collect its outstanding accounts receivable balance.

begins when the firm invests cash to purchase the raw materials that would be used to produce the goods that the firm manufactures.

begins when the firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales.

You are provided the following working capital information for the Ridge Company:

Ridge Company

Account

Inventory

$12,890

Accounts receivable

12,800

Accounts payable

12,670

Net sales

$124,589

Cost of goods sold

99,630

Cash conversion cycle: What is the cash conversion cycle for Ridge Company?

38.3 days

129.9 days

46.4 days

83.5 days

Reference no: EM13327246

Questions Cloud

Compute the activity rate for each of the activity cost pool : An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea. It came back with the recommendation that four activity cost pools be used.

Compute the unit product cost for one unit of each model : Marine, Inc., manufactures a product that is available in both a flexible and a rigid model. The company has made the rigid model for years; the flexible model was introduced several years ago to tap a new segment of the market.

Find the heat capacity for an isochoric process : The equations of state for electromagnetic radiation in thermodynamic equilibrium with a cavity of volume V at temperature T are P=a T^4/3 and U=a T^4 V, Find the heat capacity for an isochoric (i.e., constant volume) process

How far short of the target should it drop the package : A supply plane needs to drop a package of food to scientists working on a glacier in Greenland. How far short of the target should it drop the package

Find the firms dividend payout ratio and retention ratio : Payout and retention ratio: Drekker, Inc., has revenues of $312,766, costs of $220,222, interest payment of $31,477, and a tax rate of 34 percent. It paid dividends of $34,125 to shareholders.

What is the magnitude of angular acceleration of the wheel : The cyclist speeds up to a cadence of 120 (120 rotations per minute) in a surge lasting 30 seconds. What is the magnitude of angular acceleration of the wheel

How to improve on inefficiency of current web based solution : In order to improve on the inefficiencies of current web based solution, the following solutions are being proposed. We are proposing implementing a distributed systems architecture.

Understand the difference between a strong or weak thesis : Understand the difference between a strong or weak thesis. Think critically about your own thesis and how it might compare to others in your field of study.

Compute return on stockholders equity for both firms : Interpreting results from the Du Pont system of analysis - assume the following data for Cable Corporation and Multi-Media, Inc

User Account

All Pages