FIN-516 WEEK 1 – HOMEWORK ASSIGNMENT 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 budget
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Chapter 158 Distributions to Shareholders: Dividends and Repurchases ANSWERS TO END-OF-CHAPTER QUESTIONS 158-1 a. The optimal distribution policy is one that strikes a balance between dividend yield and capital gains so that the firm’s stock price is maximized. b. The dividend irrelevance theory holds that dividend policy has no effect on either the price of a firm’s stock or its cost of capital. The principal proponents of this view are Merton Miller and Franco Modigliani (MM). They
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with the actual stock price and other information of their competitors. This essay will outline both the strengths and weaknesses of each of the models used‚ and how they apply to Kellogg’s. I will be particularly focusing on: Beta Calculations‚ Dividends Valuation Model (DVM)‚ Price to Earnings ratio (P.E Ratio)‚ PEG Ratio and Cash flow methods. Kellogg’s is a major producer of cereal and convenience foods‚ with their brands including cookies‚ crackers‚ toaster pastries and cereal bars. Kellogg’s
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Coral Group is profitable due to the return on equity in recent years is 15.97 which is positive. Therefore‚ after analyzing different ratios of Café de Coral Group‚ we believe that it is a suitable company to offer a special dividend Before paying special dividends The following figure is the preliminary analysis showing the overall performance of the company‚ Café de Coral Group (0341)‚ during the period starting from 2011-03-31 to 2014-03-31. HKD in thousands 12months as of 2014-03-31
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Problem Based on Chapter 14‚ Residual Dividends 1. If Middlesex increases its cash dividends in 2012 at the same rate of growth as its Net Income rate‚ what will be the total 2012 dividend payout in Dollars? 3‚000‚000 x (1 + .08) 3‚000‚000 x 1.08 = $3‚240‚000 2. What is the 2012 dividend payout ratio if the company increases its dividends at 8%? Net income increased by 8% would be 15‚000‚000 x (1 + .08) = 15‚000‚000 x 1.08 = 16‚200‚000 Dividend Payout = 3‚240‚000 / 16‚200‚000 = .2
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cash flows; keep most of the percentage changes constant. -Kellogg’s cost cutting initiatives will be successful. -tendency of Kellogg to pay dividends forever‚ at a constant growth rate with revenue -Forecasted cost of capital will be closer to the industrial cost of capital. -Kellogg able to scale down costs independent of the economy. -Constant dividend buy back. -Kellogg WACC to be closer or equal to the industry average (debt restructuring) Kellogg is operating in an industry that requires
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Project Genesis | Atlantic Corporation | ACE Consulting Group | “A service we provide with excellence“ | ------------------------------------------------- Executive Summary The purpose of this report is to assess the viability of the acquisition of Royal Paper Corporation’s (Royal) Monticello mill and box plants by Atlantic Corporation (Atlantic). This will be conducted through the evaluation and analysis of whether this project is profitable
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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 could change the results significantly by putting the company in more of a financial bind. Based on our forecasts
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000 for the purchase of this type of inventory. Since December 1978‚ Hampton has spent $3 million on repurchasing stocks of several dissident shareholders. The $181‚000.00 tax payment in December. The $150‚000.00 dividend payment in December. We consider that this dividend payment must not be made. 2. Based on the information in the case‚ prepare a projected cash budget for the four months September through December 1979‚ a projected income statement for the same period‚ and a pro forma
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company……………………….7 Shares issued for improper purposes………………………………………....7 No dividend or inadequate dividend given…………………………………...8 3. The Circumstances Consideration……………………………………………………9 Irregular financial transaction………………………………………………...9 Breach of agreements to repay the loan……………………………………...10 Inaccessibility to the accounts……………………………………………….11 Removal of petitioner as director……………………………………………11 Failure to declare and pay dividends………………………………………...13 4. Recommendation on Section 181 – Member’s
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