outstanding as a result of the recapitalization. These assumption are based on the fact that UST continues its’ policy of paying out 64% of earnings as dividends. It is important for UST to continue to uphold this tradition of this dividend payout ratio in order to keep the stockholder’s happy‚ and to not signal any negative ideas to the stockholders and to Wall Street. Recapitalization will not hamper dividend payments in the near future. But the effect is uncertain in the long run. Refer to
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in harmony (e.i. their inability when they started to make a profit). 2- Ben & Jerrys become a takeover target due to the increased competitive pressure and Ben & Jerry’s declining financial performance in addition to the lower price/earnings ratio in comparison with industry comparables‚ so company with a higher price/earnings
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relevant. Remember that total return (k) is equal to dividend yield plus capital gains. Myron Gordon and John Lintner took this equation and assumed that k would decrease as a company’s payout increased. As such‚ as a company increases its payout ratio‚ investors become concerned that the company’s future capital gains will dissipate since the retained earnings that the company reinvests into the business will be less. Gordon and Lintner argued that investors value dividends more than capital
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GAINESBORO MACHINE TOOLS CORPORATION Overview In mid September 2005‚ Ashley Swenson‚ the chief financial officer of this large CAD/CAM equipment manufacturer must decide whether to pay out dividends to the firm¡¦s shareholders or repurchase stock. If Swenson chooses to pay out dividends‚ she must also decide on the magnitude of the payout. A subsidiary question is whether the firm should embark on a campaign of corporate-image advertising and change its corporate name to reflect its new outlook
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the comparables in the industry: Price / Sales 5.9 Price / Operating Profit 45 Price / Earnings 82 Using the three multiples above‚ we came up with valuations of $44/share‚ $49/share and $53/share for West Teleservice. Compared to the S&P recommendation of $21.5/share‚ this seemed to be much higher evaluation. Based on this analysis however‚ Ms. Little would likely recommend a valuation of $44/share. We then proceeded to value West Teleservice using the DCF method. In using the method
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Question E Assume that Bon Temps is a constant growth company whose last dividend (Dₒ‚ which was paid yesterday) was $2.00 and whose dividend is expected to grow indefinitely at a 6% rate. (i) What is the firm’s expected dividend stream over the next 3 years? Temp
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TO: Board of Directors‚ Linear Technologies FROM: Mr. Paul Coghlan CFO‚ Linear Technologies RE: Dividend Policy Summary: Based on the financials to date and the forward looking capital investments required Linear should increase their dividend payout by $0.01 per share. Entering the fourth quarter of 2003 the market seems to show continued signs of improvement. The company has shown steady growth and revenues are forecasted to exceed 2002’s by 19%. The forecast shows net income coming in
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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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http://www.casetutors.com/8398/Valuing-Wal-Mart-2010.html Valuing Wal Mart 2010 Case ID - W11058 Solution ID - 8398 1389 Words Abstract An investment advisor of a brokerage firm Sabrina Gupta was studying stocks and valuation of Wal Mart Stores Inc. Wal Mart founded by Sam Walton was the one of world’s largest retailer store operating in all 50 states and internationally in many countries. The immensity of Wal Mart operations can be estimated by the fact that it had 2.1 million employees
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Introduction to Procter & Gamble Procter & Gamble (P&G) is a multinational corporation that provides consumer products in the areas of pharmaceuticals‚ cleaning supplies‚ personal care‚ and pet supplies. The global consumer goods company was started by William Procter‚ an English candle maker & James Gamble‚ an Irish soap maker in 1837‚ and has been well established since then‚ ranking fifth place of the "World’s Most Admired Companies” by Fortune Magazine . P&G constantly strives to provide branded products
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