15.3 Dividend Relevance Model 15.3.1 15.3.2 Walter Model Gordon’s Dividend Capitalization Model Dividend Decision 15.4 Dividend Irrelevance Theory: Miller and Modigliani Model 15.5 Stability of Dividends 15.6 Forms of Dividends 15.7 Stock Split 15.8 Summary Terminal Questions Answers to SAQs and TQs 15.1 Introduction Dividends are that portion of a firm’s net earnings paid to the shareholders. Preference shareholders are entitled to a fixed rate of dividend irrespective
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Use the MS Project file from Part 3 and 4 to complete Part 5. Use Table A2.16 and complete the following steps. Save as a new MS Project file titled Conveyor Belt Project Part 5 and answer the questions below. Part 5 Table A2.16 (Fourth Quarter - January 1‚ 2011) Start Finish Actual Remaining Activity Date Date Duration Duration Hardware specifications 2/9/10 4/12/10 45 0 Hardware design 4/13/10 7/16/10 67 0 Hardware documentation 7/19/10 8/24/10 27 0 Prototypes
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REASONS FOR DIVIDENDS Dividend policy is likely to be set in the form of a goal rather than a rigid rule‚ even though a definite policy has the advantage of providing the investor‚ or potential investor‚ a clear basis for choice. Investors knowing the dividend policy of the alternative companies can choose the type of company that best fits their individual investment goals. This is desirable‚ because stockholders differ in the extent to which they prefer dividends rather than opportunities for
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Topic: DIVIDENDS 1. Payments made out of a firm ’s earnings to its owners in the form of cash or stock are called: A) Dividends. B) Distributions. C) Share repurchases. D) Payments-in-kind. E) Stock splits. Answer: A Topic: REGULAR CASH DIVIDENDS 2. A cash payment made by a firm to its owners in the normal course of business is called a: A) Share repurchase. B) Liquidating dividend. C) Regular cash dividend. D) Special dividend. E) Extra cash dividend. Answer:
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Stability of dividend policy. There may be three types of dividend policy (1) Strict or Conservative dividend Policy which envisages the retention of profits on the cost of dividend pay-out. It helps in strengthening the financial position of the company; (2) Lenient Dividend Policy which views the payment of dividend at the maximum rate possible taking in view the current earing of the company. Under such policy company retains the minimum possible earnings; (3) Stable Dividend Policy suggests
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Dividend Policy Factors Affecting Dividend Policy: 1. External Factors 2. Internal Factors External Factors Affecting Dividend Policy 1. General State of Economy: * In case of uncertain economic and business conditions‚ the management may like to retain whole or large part of earnings to build up reserves to absorb future shocks. * In the period of depression the management may also retain a large part of its earnings to preserve the firm’s liquidity position. * In periods of
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DIVIDEND DECISION The dividend decision is one of the 3 basic decisions which a financial manager maybe required to take‚ the other two being the investment decisions and the financing decisions. In each period any earnings that remain after satisfying obligations to the creditors‚ the government and the preference sh.hol can either be retained or paid out as dividends or bifurcated between retained earnings and dividends. The retained earnings can be invested in assets which will help
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Chapter 14. Residual Dividends Residual Dividend -2011 Net Income $15.0 Million -2012 Net Income increase by 8% -Capital structure 35% Debt‚ 65% Equity -2011 paid $3.0 million cash dividends -2012 invest a major capital project; capital budget for the project is $12.0 million 1. Cash dividends 2012: 3‚000‚000 x (1+0.08) = 3‚000‚000 x 1.08 = 3‚240‚000 payout in 2012 2. Dividend Payout ratio 2012 (8%):
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Belt conveyor‚ also called continuity conveyor‚ is a kind of machinery transporting materials in a certain line continuously. Its transmission line is generally constant‚ and able to take horizontal or tilting transmission as well as form space transmission lines. The machine has a great transmission capacity and long distance‚ which can also achieve some process operations simultaneously. Belt conveyor made by our company has the advantages of large transportation amount‚ simple structure‚ convenient
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Use the MS Project file from Part 5 to complete Part 6. Use the revised data below and save as a new MS project file title Conveyor Belt Project Part 6 and answer the questions below: Part 6 You have received revised estimates for the remaining activities at the end of the fourth quarter: -Prototypes will be completed on 3/8/11 -Serial I/O drivers will be completed on 6/30/11 -System hardware/software test will start on 7/11/11 and take 25 days -Order circuit boards will start on 8/8/11
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