Jonathan’s response should be like this‚ “The other variation of the DDM can one use is by calls for recognizing that the dividend payments may grow as a small but constant rate. With this approach‚ the equity of the company is considered to be a perpetuity. Understanding which scenario is applicable to the stock under consideration is very important‚ as it will impact how the dividend payment relates to the company’s equity. The reason of this variations are ways to account for factors that are unique
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Review DEPARTMENT OF BUSINESS MANAGEMENT Student Name: Student Number: Contact Number: Email Address: Amkela Ngwenya 4397-434-1 082 211-5742 amkelab.ngwenya@gmail.com SUPERVISOR JS Kasozi RESEARCH TOPIC: DETERMINANTS OF CORPORATE DIVIDEND PAYMENT POLICIES: A CASE OF THE BANKING INDUSTRY IN SOUTH AFRICA Declaration I declare that the work I am submitting for assessment contains no section copied in whole or in part from any other source unless explicitly identified in quotation
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different issues about: financing decisions (share or bond issue) – NOT IPO‚ dividend decision (residual‚ stable or smooth policy; updated dividend payment) using real options in corporate finance decision (abandon or expand) working capital management (cash holding; A/R management) and financial planning in practice (Pro-forma Financial Statement) I. Introduction 1. Topic: Dividend decision A dividend is something of value that is distributed to a firm’s stockholders on a pro-rata
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3 1.2 Leverage 3 Importance of Leverage 3 1.3 Return on Investment 4 1.4 Asset Turnover 4 1.5 Asset Leverage 4 1.6 Net Margin 5 2.The Key Investor Ratios 5 2.1 Dividend rate 6 2.2 Dividend Yield 6 2.3 Earnings Per Share (EPS) 6 2.4 Price Earnings Ratio (P/E Ratio) 7 3. Importance of Profitability and Liquidity in context of Business Survival 7 3.1 Profitability 7 3.2 Liquidity
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Part 2 The chocolate industry in UK Britain really is a nation of chocolate lovers. Among the whole world‚ UK has the seventh highest consumption of chocolate. A British eats an average 17.49lbs of chocolate per year (The World Atlas of Chocolate‚ 2011). Switzerland takes the top spot. In Britain‚ an estimated 660‚900 tones of chocolate are eaten per year which is an average of 11kg per person. The UK chocolate industry is worth £3.6billion and sales of chocolate just keep growing and growing
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Managerial Finance – Problem Review Set – Dividends Policy 1) If a firm adopts a residual distribution policy‚ distributions are determined as a residual after funding the capital budget. Therefore‚ the better the firm’s investment opportunities‚ the lower its payout ratio should be. a. True b. False 2) Even if a stock split has no information content‚ and even if the dividend per share adjusted for the split is not increased‚ there can still be a real benefit (i.e.‚ a higher value
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product line. Dividend per share given by the company is Rs.2.5 Dividend policy has been to maintain a stable rupee dividend. What would be an appropriate dividend policy for ABC Industries Ltd.? Ans. The management of ABC Industries Ltd should recognize that it will be in constant need of more funds owing to its intended policy of moving into new product lines in growth-oriented industries. To the extent the shareholders have strong expectations about maintenance of the current dividend‚ the current
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rate. Answer: D Explanation: A) B) C) D) Because these cash flows are risky‚ we cannot discount them using the risk-free interest rate. Diff: 1 Topic: 9.1 Stock Prices‚ Returns‚ and the Investment Horizon Skill: Conceptual 2) When discounting dividends you should use? A) the weighted average cost of capital. B) the after tax weighted average cost of capital. C) the equity cost of capital. D) the before tax cost of debt. Answer: C Explanation: A) B) C) D) Diff: 1 Topic: 9.1 Stock Prices‚ Returns
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concerning an alteration of the current dividend rate. The current EPS of the company is now $14-$15. Historically‚ the dividend payout ratio mounts to an average 50%. So‚ the company expects payout the payout in 1959 to be $7/share. In the previous year the dividend rate was cut from $1.3 to $1.2 per share. But after the new deal‚ the CEO proposed a hike in the quarterly payout to $1.6 per share from the $1.2 given at present. The CEO even suggested the dividend rate to be propped up to $1.80 in 1960
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Nations Bank Purpose: The purpose of this case is to calculate a stock’s price using its past dividends as an indicator of future dividend growth rates. The student must determine the stock’s required rate of return (CAPM) and future expected dividend growth rate and use the Gordon Growth Model to calculate a current price. 1. The equation for CAPM is kj = Rf + [bj x (Rm - Rf)] where‚ kj = required return on asset j‚ Rf = risk-free rate of return‚ bj = beta coefficient for asset
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