Liquidating dividend and the firm

Assignment Help Finance Basics
Reference no: EM133057439

As the financial manager of firm Mini, you are analyzing the dividend policy of the firm. You find that firm Mini can either pay out dividends of $2 per share every year for each of the next two years or can pay $1 per share in one year, reinvest the other $1 per share into the firm and then pay $3.1 per share in two years. Investors require a 10% return. Show your work when comparing the two dividend policy options and discuss the conclusion you got. Assuming that the second dividend is a liquidating dividend and the firm has 100,000 shares outstanding.

Reference no: EM133057439

Questions Cloud

Compensation and benefits elements help in recruiting : Thoroughly explain how various compensation and benefits elements help in recruiting, motivating and retaining employees.
Expected rate of return of stock : The standard deviation of the market returns is 18%. Assume that the next dividend will be paid after one year, at t= 1.
Security measures in transportation-logistics management : Prepare a description of security measures in transportation and logistics management. Discuss theory and politics of transportation and logistics management.
Prepare shareholders equity section of handley statement : Prepare the shareholders' equity section of Handley's statement of financial position, including any required note disclosure
Liquidating dividend and the firm : As the financial manager of firm Mini, you are analyzing the dividend policy of the firm. You find that firm Mini can either pay out dividends of $2 per share e
Loan for home renovations by 5c : Evaluation process to measure individual credit worthiness by 5 C's of Credit FOR PERSONAL LOAN BORROWER
Cost of equity using the dividend growth method : Floyd Industries stock has a beta of 1.25. The company just paid a dividend of $.40 and the dividends are expected to grow at 5 percent per year.
Determine the amount of after tax income : Question - Determine the amount of after tax income an individual would have under each of the following independent scenarios
Securities commission and bursa malaysia : You may share the specific steps taken by the Securities Commission and Bursa Malaysia.

Reviews

Write a Review

Finance Basics Questions & Answers

  Expense of buying all new field surveying

Capital Recovery Factor (A/P A small surveying company is faced with the expense of buying all new field surveying and office plotting machines at a total cost

  What is the interest rate on offer

S&S Furniture is offering a bedroom suite for $3,200. The credit terms are 60 months at $55 per month. What is the interest rate on this offer?

  Discounted payback period

Polk Products is considering an investment project with the following cash flows.  Determine  the project's discounted payback period.

  How much will you have at retirement

You plan on saving $5,000 per year for the next 45 years for your retirement account. How much will you have at retirement if you can earn 7 percent.

  How long is the operating cycle

A firm has an inventory turnover rate of 15.7, a receivables turnover rate of 20.2, and a payables turnover rate of 14.6. How long is the operating cycle?

  Inventory plus the current manufacturing costs

(a) Determine the cost of goods transferred to finished goods inventory. (b) Determine the cost of the ending work-in-process inventory? (c) What was the total cost of the beginning work-in-process inventory plus the current manufacturing costs?

  Similarities and differences in the research methods

Similarities and differences in the research methods. Describe the research method and research design that best fits in management of study

  How would investors and management view eva and fcf?

How would investors and management view EVA and FCF? Try one that you are familiar with-you shop at their store, eat at their restaurants, or wear their clothes. On their Web site, try to find their annual financial report.

  What is the cumulative tax advantage of the merger

What is the cumulative tax advantage of the merger? What is the maximum cash price that should be paid for Harassed Hippo? (Consider the npv only)

  What is the expected cost of the gas for this order

If Olde Virginia hedges the cost of its natural gas inputs by buying call options at a strike price of $5.75, what is the expected cost of the gas for this order? Which strategy would you suggest and why?

  Portfolio theory as described by markowitz is most

portfolio theory as described by markowitz is most concerned witha. the elimination of systematic risk.b. the effect of

  Earnings per share of barnes enterprises changed

a. If all the shares of the Noble Corporation are exchanged for those of Barnes Enterprises on a share-for-share basis, what will postmerger earnings per share be for Barnes Enterprises? Use an approach similar to that in Table 20-3. b. Explain wh..

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