Reference no: EM132901761
Question - Assume perfect capital markets. Kay Industries currently has $100 million invested in short-term treasury bills paying 8%, and it pays out the interest payments on these securities as a dividend. The board is considering selling the treasury bills and paying out the proceeds as a? one-time dividend payment. Assume that investors pay a 12% tax on dividends but no capital gains taxes and that Kay does not pay corporate taxes.
a. If the board went ahead with this plan, what would happen to the value of Kay's stock upon the announcement of a change in policy?
b. What would happen to the value of Kay's stock on the ex-dividend date of the one-time dividend?
c. Given these price reactions, will this decision benefit investors?
a. If the board went ahead with this plan, what would happen to the value of Kay's stock upon the announcement of a change in policy? (Select the best choice below.)
A. The value of Kay would fall by $100 million.
B. The value of Kay would rise by $100-$100×12%=$88 million.
C. The value of Kay would rise by $100 million.
D. The value of Kay would remain the same.
What social issues were taking place at the time
: How do you see specific characters or elements from specific episodes fitting in with these important events and issues of the time?
|
Microeconomic data from public sources
: You will demonstrate your ability to find microeconomic data from public sources and to make a simple spreadsheet in Excel.
|
What is the cost of the units completed and transferred out
: If in the previous exercise the total costs charged to the department amounted to $960,000, what is the cost of the units completed and transferred out
|
What are the benefits of evaluating potential suppliers
: What are the benefits of evaluating potential suppliers?
|
What would happen to the value of Kay stock
: If the board went ahead with this plan, what would happen to the value of Kay's stock upon the announcement of a change in policy
|
Monopolistic competitive-oligopoly or pure monopoly
: With your selected business in mind, determine if it is competitive, monopolistic competitive, an oligopoly, or pure monopoly.
|
What the sources of stress for employees are
: Explain what the sources of stress for employees are and what HRM managers can do to reduce stress in the workplace. Illustrate in detail.
|
In which building would you recommend that K Company locate
: Purchase for a cash price of $600,000, useful life 25 years. In which building would you recommend that K Company locate, assuming a 12% cost of funds
|
Determine appropriate health information standards
: There are several different database tools used in this program. Name at least four database tools and give a summary for each
|