upsetting the shipment schedule. 2. Review the result of your forecast. Do the cash budgets and the pro forma financial statements yield the same result? Why? The cash budgets and statement of sources and uses yield negative results concerning the principal payment of the loan for December‚ based on Mr. Cowins’ plan. This analysis is based on projected sales‚ dividend payments and tax payments. Consequently‚ the sales projects and accounts receivables are 30 days net; if not paid on time‚ then this
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income this year will be $3‚500‚000. If the company follows a residual dividend policy‚ what will be its total dividend payment? (a) $205‚000 (b) $500‚000 (c) $950‚000 (d) $2‚550‚000 (e) $3‚050‚000 Student Answer: Answer:(c) $3‚000‚000 $3‚500‚000 – $2‚550‚000=$950‚000 × 85% = $2‚550‚000. The firm has $3‚500‚000 of net income‚will be dividends. Instructor Explanation: Answer is: c Text: pp. 570-572 - Residual Dividends‚ Chapter 14 The amount of new investment which must be financed with
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should set dividends in order to avoid conflicts of interest? Create a specific policy and method of making dividend decisions. Should non-employee family members be represented in this process? The company’s board of directors is responsible for determining a dividend policy and declaring dividends. In this case‚ Bob and Rex should decide dividends‚ but they should get advice from financial planner and advisory board and communicate well with family members. Method of making dividend decisions
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September 2004 Understanding the Demographic Dividend By John Ross A fresh reason for attending to fertility dynamics has emerged—the “demographic dividend.” As fertility rates fall during the demographic transition‚ if countries act wisely before and during the transition‚ a special window opens up for faster economic growth and human development. WHAT IS THE DEMOGRAPHIC DIVIDEND? Simply stated‚ the demographic dividend occurs when a falling birth rate changes the age distribution‚1 so
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– HOMEWORK ASSIGNMENT Steven Kelley 5/8/13 Problem Based on Chapter 14‚ Residual Dividends Middlesex Plastics Manufacturing had 2011 Net Income of $15.0 Million. Its 2012 Net Income is forecast to increase by 8%. The company’s capital structure has been 35% Debt and 65% Equity since 2010‚ and the company plans to maintain this capital structure in 2012. The company paid $3.0 Million cash dividends in 2011. The company is planning to invest in a major capital project in 2012. The capital
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of frozen foods that are sold under its own brand name to retailers. Rae is considering if a dividend discount mode would be appropriate for valuing Tasty Foods. He has complied the information in the following table for the company’s EPS and DPS during the last five years. The quarterly dividends paid by the company have been added to arrive at the annual dividends. Rae has also computed the dividend payout ratio for each year as DPS/EPS and the growth rates in EPS and DPS. Year EPS ($)
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use Retained earnings represent the amount a company has left after it has paid all its expenses‚ taxes‚ and dividends. A company can return all the cash it has left after it has taken care of its obligations‚ but that would handicap its efforts to expand operations‚ make acquisitions‚ and replace equipment. Some investors like when this figure is returned to them in the form of dividends‚ but most do understand that something must be reinvested for the long term. Companies may retain earnings
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Introduction – Company background Dividend payment decisions Policy analysis ◦ Zero dividend payout – pros and cons ◦ 40% or $0.2 per share – pros and cons ◦ Residual-dividend payout – pros and cons Conclusion Founded in 1923 In early days‚ it has designed and manufactured a number of machinery parts‚ including metal presses‚ dies and molds. By 1975‚ it has evolved as innovative producer of industrial machinery and machine tools. In 1980‚ entered in CAD/CAM and established
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present to the Avon board of directors for final approval the following day. These proposals included (1) a public announcement that Avon would explore plans to divest two of its businesses‚ probably at a considerable book loss; (2) a reduction of the dividend on Avon’s common stock; and (3) an exchange offer under which Avon would issue an unusual preferred stock in exchange for up to 25% of its common shares. Background Avon Products‚ Inc.‚ founded in 1886‚ was one of the world’s largest manufacturers
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Chapter 17: * Only standard DCF (like from midterm) * will not be tested on Why can IRR be misleading? * Multiple IRRs * Timing problem * Scale problem When do we prefer preferred over common stock? * Bankruptcy * Dividends Agency Costs: * Example: stockholders vs bond-holders during bankruptcy * Agent acts in interest of Principal * Costs: * Misaligned interests * Observation costs * When interests misaligned‚ how can you resolve?
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