Ask Corporate Finance Expert

problem 1: Dividend Policy

Morning Star (www.morningstar.co.uk) conducted a search to reveal the top dividend-paying stocks on the FTSE 350. The data was collected in October 2012 and the list of 20 large and midcap companies with dividend yield figures (ranging from 5.9% to just over 14% for the 12 months period) is available at:

http://www.morningstar.co.uk/uk/news/95410/top-20-high-yielding-stocks.aspx

Required:

Critically assess how companies set their dividend policies, and describe the factors that a company will consider in setting its dividend policy and in finding out the level of dividend to be paid. Support your arguments by reference to ONE of the top 20 companies listed in the webpage of Morning Star mentioned above.

Your comments must incorporate both theoretical/academic arguments and real world practices. You must research the subject beyond the basic facts and should provide references and critical commentary to support the points. You should as well provide a short introduction on the key issues and a conclusion consistent to your discussion.

problem 2: Working Capital Policy

Required:

Critically assess how companies set their working capital policies and elucidate the factors that a company must consider in setting its working capital policy and in finding out the level of working capital to be maintained.

Support your arguments by reference to TWO FTSE250 companies in the same industry.

The description must emphasize the trade-off relationship between liquidity and profitability with reference to conservative, moderate and aggressive working capital policies. Your comments must incorporate both theoretical/academic arguments and real world practices. You should research the subject beyond the basic facts, and must provide computations, references and critical commentary to support the points. You should as well provide a brief introduction on the key issues and a conclusion consistent to your discussion.

Note: You can visit the link below to choose one industry of your choice from the available list of industries. Please note both companies should come from the same industry. You are recommended not to use banks, and companies engaged in financial services.

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/indices/constituents-indices.html?index=MCX

problem 3: Cost of Capital/Investment Appraisal

You have been appointed as the financial manager for Decido PLC and have been tasked with calculating their weighted average cost of capital.

Based on preliminary information accessible from the financial statements, you have been able to extract the given:

1178_financial statements.jpg

Decido will have to settle the 8% convertible debt at par in 8 year time

Required:

a) find out the market value weighted average cost of capital of Decido stating and justifying any suppositions made.

b) Discuss the conditions under which the WACC is ideal for use in an Investment appraisal. This discussion must describe:

  • Business and financial risk
  • Their impact on WACC
  • An explanation of how some types of risk require an adjustment to WACC and how these adjustments are done

c)  Discuss whether the dividend growth model or the Capital Asset Pricing Model offers a better estimate of a company’s cost of capital. An in-depth analysis, assessing the pros and cons of both methods, is expected.

Corporate Finance, Finance

  • Category:- Corporate Finance
  • Reference No.:- M9726

Have any Question?


Related Questions in Corporate Finance

Business finance case study assignment -instructions - you

BUSINESS FINANCE CASE STUDY ASSIGNMENT - Instructions - You must do Questions 1-5a, 8 and 10 on a spreadsheet. Eternal Youth Ltd (EY) is a New Zealand company which produces and sells cosmetics. Its financial year is 1 J ...

Q1 delta hedgingon sept 30th 2011 exxon mobil xom stock was

Q1 (Delta Hedging) On Sept 30th, 2011, Exxon Mobil (XOM) stock was traded at $72.63 while the December XOM put option with $75 exercise price is traded at $5.00 and the December XOM call option with $70 exercise price is ...

Q1 delta hedgingon sept 30th 2011 exxon mobil xom stock was

Q1 (Delta Hedging) On Sept 30th, 2011, Exxon Mobil (XOM) stock was traded at $72.63 while the December XOM put option with $75 exercise price is traded at $5.00 and the December XOM call option with $70 exercise price is ...

Assignment -part a - saturn petcare australia and new

Assignment - Part A - Saturn Petcare Australia and New Zealand is Australia's largest manufacturer of pet care products. Saturn have been part of the Australian and New Zealand pet care landscape since opening their firs ...

Mini case assignment -problems - use internet to identify a

Mini Case Assignment - Problems - Use internet to identify a house or condo that you may be interested in investing as a rental property for 10+ years. (Suggested price range between $250k - $1 million) 1. Estimate the a ...

Descriptionstudents are required to study undertake

Description: Students are required to study, undertake research, analyse and conduct academic work within the areas of corporate finance. The assignment should examine the main issues, including underlying theories, impl ...

Corporate finance assignment - required this assessment

Corporate Finance Assignment - Required: This assessment task is a written report and analysis of the financial performance of a selected company in order to provide financial advice to a wealthy investor. It will be bas ...

Interest swap valueabc bank has agreed to receive 3-month

Interest swap value ABC bank has agreed to receive 3-month LIBOR and pay 8% per annum on a notional principal of $100 million. The swap has a remaining life of 11 months. The LIBOR spot rates for 2-month, 5-month, 8-mont ...

Graph an event study relationshipthe event in consideration

Graph an event study relationship. The event in consideration here is: "Environmental performance, being green, clean-tech, corporate sustainability, and many other "green" issues are on the forefront of the current econ ...

Question - assume that the average firm in your companys

Question - Assume that the average firm in your company's industry is expected to grow at aconstant rate of 6 percent and its dividend yield is 7 percent. Your company is about as risky as the average firm in the industr ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As