Investment and dividend policies for the coming year

Assignment Help Financial Management
Reference no: EM131989923

Harris Company must set its investment and dividend policies for the coming year. It has three independent projects from which to choose, each of which requires a $4 million investment. These projects have different levels of risk, and therefore different costs of capital. Their projected IRRs and costs of capital are as follows: Project A: Cost of capital = 15%; IRR = 18% Project B: Cost of capital = 12%; IRR = 16% Project C: Cost of capital = 9%; IRR = 10% Harris intends to maintain its 25% debt and 75% common equity capital structure, and its net income is expected to be $12,321,000. If Harris maintains its residual dividend policy (with all distributions in the form of dividends), what will its payout ratio be? Round your answer to two decimal places.

Reference no: EM131989923

Questions Cloud

Calculate using both retrospective and prospective formulas : What is the outstanding loan balance immediately after the 7th payment? Calculate using both the retrospective and prospective formulas.
Eliminate as candidate for the optimal risky portfolio : Which portfolio can we eliminate as a candidate for the optimal risky portfolio? Explain.
What is the value of the embedded expansion option : What is the value of the embedded expansion option? What is the NPV of the project, ignoring the embedded expansion option?
What is the firm cost of capital after taxes : Using market values for debt and equity, what is the firm's cost of capital after taxes with a tax rate of 40%, as a percentage?
Investment and dividend policies for the coming year : Harris Company must set its investment and dividend policies for the coming year.
What is the value of the embedded abandonment option : What is the value of the embedded abandonment option? What is the NPV of the project, after accounting for the abandonment option?
What is the bond yield to maturity : If the bond's yield to maturity changes to 9.1 % APR, what will be the bond's price? What is the bond's yield to maturity?.
The next coupon payment is due in exactly six months : what coupon rate do you need to? set? Assume that for both? bonds, the next coupon payment is due in exactly six months.
What is financial break-even point for project : What is the financial break-even point for the project?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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