Week 12 Solutions - 1516 Words

Week 12 Questions Chapter 16 2. Dividend policy – Here are several â€Å"facts† about typical corporate dividend policies. Which are true and which are false? a. Companies decided each year’s dividend by looking at their capital expenditure requirements and then distributing whatever cash is left over. False. The dividend depends on past dividends and current and forecasted earnings. b. Managers and investors seem more concerned with dividend changes than with dividend levels. True. Dividend changes convey information to investors. c. Managers often increase dividends temporarily when earnings are unexpectedly high for a year or two. False. Dividends are â€Å"smoothed.† Managers rarely increase regular dividends temporarily. They may pay†¦show more content†¦How many shares will need to be repurchased? Again, assuming investors learn nothing from the announcement about the House of Herring’s prospects. Nothing. The stock price will stay at $130. 846,154 shares will be repurchased. c. Suppose the company increase dividends to $5.50 per share and then issues new shares to recoup the extra cash paid out as dividends. What happens to the with- and ex-dividend share prices? How many shares will need to be issued Again, assume investors learn nothing from the announcement about House of Herring’s prospects. The with-dividend price stays at $130. Ex-dividend drops to $124.50; 883,534 shares will be issued. 25. Payout and the cost of capital – Comment briefly on each of the following statements: a. â€Å"Unlike American firms, which are always being pressured by their shareholders to increase dividends, Japanese companies pay out a much smaller proportion of earnings and so enjoy a lower cost of capital.† This statement implicitly equates the cost of equity capital with the stock’s dividend yield. If this were true, companies that pay no dividend would have a zero cost of equity capital, which is clearly not correct. b. â€Å"Unlike new capital, which needs a stream of new dividends to service it, retained earnings have zero cost.† One way to think of retained earnings is that, from an economic standpoint, the company earns money on behalf of the shareholders, who then immediately reinvest theShow MoreRelatedMat 540 Week 7 Homework1110 Words   |  5 PagesMAT 540 Week 7 Homework Click below link for Answer http://workbank247.com/q/mat-540-week-7-homework/3681 http://workbank247.com/q/mat-540-week-7-homework/3681 Chapter 3 8. Solve the model formulated in Problem 7 for Southern Sporting Goods Company using the computer. a. State the optimal solution. b. What would be the effect on the optimal solution if the profit for a basketball changed from $12 to $13? What would be the effect if the profit for a football changed from $16Read MoreCase Study: Farmers Restaurant Essay1214 Words   |  5 PagesInventory management is an attempt to balance inventory needs and requirements with the need to minimize costs resulting from obtaining and holding inventory. Considering these two solutions, the single solution model is the best solution for Farmers Restaurant. Evaluating the advantages and disadvantages of the given solutions, single period model is appropriate since the business is involved in food services. If the company uses the fixed-order-interval method, it cannot check dependably for spoilagesRead MoreDepreciation and Value1724 Words   |  7 Pagessuggests jogging for 12 minute each day for the first week. Each week thereafter, he suggests that you increase that time by 6 minutes per day. How many weeks will it be before y ou are up to jogging 60 minutes per day? 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I posted an annotated solution to Problem 2-5.   This problem is an examplar for both the chapter 2 and 3 problems.   In this example I show how I typically set up a problem.   First I set up the linear programming model and then develop a parallel set-up to use as input to the Solver add-in.   I use this strategy because I first like to set up the problem solution before I worry aboutRead MoreOperations Management Question1146 Words   |  5 PagesFALL 2011 2011 Deadline: October 26, Middle East Technical University – Northern Cyprus Campus BUS 361 Operations Management Homework 1 - Solutions 1. Fruit Computer Company manufactures memory chips in lots of ten chips. From past experience, Fruit knows that 80% of all lots contain 10% (1 out of 10) defective chips, 20% of all lots contain 50% (5 out of 10) defective chips. 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The solution involves implementing the Energy Efficient Lighting Program (EELP) in order to reduce the energy consumption problems in the building. Proposal Synopsis In this letter, I present a proposal to implement the Energy Efficient Lighting Program for the Domain College Park apartment complexes. The problem is that the