Georgia Atlantic Company
Case 19
Georgia Atlantic Company
Dividend Policy
CASE INFORMATION
Purpose
The purpose of this case is to have students examine dividend policy--cash dividends, stock splits, and stock dividends--from the viewpoint of its effect on corporate share prices.
Time Required
About one and a half hours of student preparation. If the case is to be written up and handed in, double the time required.
Complexity
A--relatively simple.
Flexibility
This case can be used in several ways. In the introductory course, the case can be used as the basic structure for a lecture or as a written assignment in conjunction with lecture and text material. In our more advanced courses, which usually have smaller enrollments, we have found additional uses which produced very satisfactory results. To encourage active class discussion of various aspects of dividend policy, we divide the class into groups and assign each group one or several of the positions with respect to dividend policy. Students then present oral arguments in favor of the particular policy they have been assigned and against the others. Students exhibit a good deal of creativity in developing reasons for following a policy they may or may not believe in.
MODEL INFORMATION
There is no model for this case.
CASE SOLUTION
Question 1
Here are the data calculated from the information in Table 2:
Georgia Atlantic Company Growth Rate _______________________ _______________________ Georgia Atlantic Industry EPS(t) EPS(t-5) Company Average _______________________ _______________________ 1977-1982 $106 $100 1.2% 6.2% 1982-1987 109 106 0.6 7.1 1987-1992 143 109 5.6 7.9
Georgia Atlantic Company
Dividend Policy
CASE INFORMATION
Purpose
The purpose of this case is to have students examine dividend policy--cash dividends, stock splits, and stock dividends--from the viewpoint of its effect on corporate share prices.
Time Required
About one and a half hours of student preparation. If the case is to be written up and handed in, double the time required.
Complexity
A--relatively simple.
Flexibility
This case can be used in several ways. In the introductory course, the case can be used as the basic structure for a lecture or as a written assignment in conjunction with lecture and text material. In our more advanced courses, which usually have smaller enrollments, we have found additional uses which produced very satisfactory results. To encourage active class discussion of various aspects of dividend policy, we divide the class into groups and assign each group one or several of the positions with respect to dividend policy. Students then present oral arguments in favor of the particular policy they have been assigned and against the others. Students exhibit a good deal of creativity in developing reasons for following a policy they may or may not believe in.
MODEL INFORMATION
There is no model for this case.
CASE SOLUTION
Question 1
Here are the data calculated from the information in Table 2:
Georgia Atlantic Company Growth Rate _______________________ _______________________ Georgia Atlantic Industry EPS(t) EPS(t-5) Company Average _______________________ _______________________ 1977-1982 $106 $100 1.2% 6.2% 1982-1987 109 106 0.6 7.1 1987-1992 143 109 5.6 7.9