Ask Question, Ask an Expert


Ask Basic Finance Expert

Puckett Products is planning for a $5 million in capital expenditures next year. Puckett's target capital structure consists of 60% debt and 40% equity. If net income next year is $3 million and Puckett follows a residual distribution policy with all distributions as dividends, what will be its dividend payout ratio?
A firm has $10 million shares outstanding with a market price of $20 per share. The firm has $25 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has no other financial investments or any debt. What is the firm's value of operations, and how many shares will remain after purchase?
JPix management is considering a stock split. JPix currently sells for $120 per share and a 3-for-2 stock split is contemplated. What will be the company's stock price following the stock split, assuming that the split has no effect on the total market value of JPix's equity?
Gardial GreenLights, a manufacturer of energy-efficient lighting solutions, has had such success with its new products that it is planning to substantially expand its manufacturing capacity with a $15 million investment in new machinery. Gardial plans to maintain its current 30% debt-to-total-assets ratio for its capital structure and to maintain its dividend policy in which at the end of each year it distributes 55% of the year's net income. This year's net income was $8 million. How much external equity must Gardial seek now to expand as planned?
Boehm Corporation has had stable earnings growth of 8% a year for the past 10 years and in 2013 Boehm paid dividends of $2.6 million on net income of $9.8 million. However, in 2014 earnings are expected to jump to 12.6 million, and Boehm plans to invest $7.3 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2014 Boehm will return to its previous 8% earnings growth rate. Its target debt ratio is 35%.
a. find out Boehm's total dividends or 2014 under each of the following policies:
1. Its 2014 dividend payment is set to force dividends to grow at the long-run growth rate in earnings.
2. It continues the 2013 dividend payout ratio.
3. It uses a pure residual policy with all distributions in a form of dividends (35% of the $7.3 million investment is financed with debt).
4. It employs a regular-dividend-plus-extras policy, with the regular dividend being based on the long-run growth rate and the extra dividend being set according to the residual policy.
b. Which of the preceding policies would you recommend? Restrict your choices to the ones listed, but justify your answer.
c. Does a 2014 dividend of $9 million seem reasonable in view of your answers to part a and b? If not, should the dividend be higher or lower?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M924043
  • Price:- $60

Guranteed 36 Hours Delivery, In Price:- $60

Have any Question? 

Related Questions in Basic Finance

Consider the following analysis the rise and fall of a

Consider the following analysis: The rise and fall of a bond's price has a direct inverse relationship to its yield to maturity, or interest rate. As prices go up, the yield declines and vice versa. For example, a $1,000 ...

As mentioned in the chapter during early 2010 investors

As mentioned in the chapter, during early 2010, investors began to worry that the government of Greece might default on its bonds. The rating agencies downgraded Greek bonds several times. Following one of the rating dow ...

1 what is the scientific method and how does it guide

1. What is the scientific method, and how does it guide research? 2. Discuss the basic characteristics of scientific inquiry (empiricism, objectivity, and accumulation) and their value to science. 3. In what ways is scie ...

A 5-kg mass hangs on a rope wrapped around a frictionless

A 5-kg mass hangs on a rope wrapped around a frictionless disk (I = 1/2 mr^2) pulley of mass 12 kg and radius 75.0 cm. What is the acceleration of the mass?

Following the end of world war ii in 1945 the reichsmark

Following the end of World War II in 1945, the Reichsmark, the German currency, lost so much value that a barter economy arose. During this period, many Germans used U.S. cigarettes as currency. Why might cigarettes, rat ...

1 what is the primary logic behind potential separation of

1. What is the primary logic behind potential separation of marketing and logistics channel structure? 2. How does the risk related to inventory compare among manufacturers, wholesalers, and retailers? 3. Why wouldn't a ...

Evaluate the quality of internet resourcesselect two

Evaluate the quality of Internet resources. Select two Internet resources and evaluate them based on the five criteria: authority, accuracy and reliability, purpose/objectivity, coverage, and currency. Search for news ab ...

Use the internet and or strayer resource center to

Use the Internet and / or Strayer Resource Center to research career options within the field of finance. Consider the Bureau of Labor Statistics Website, and the Websites of finance professional associations such as the ...

Problems -1 triangular arbitragesuppose you observe the

Problems - 1. Triangular Arbitrage Suppose you observe the following posted exchange rates on the Japanese yen (¥) and South African ran (R) against the US dollar: JPY - ¥97.3702/$ ZAR - R10.1453/$ The posted cross rate ...

1 compare and contrast the transport principles of economy

1. Compare and contrast the transport principles of economy of scale and economy of distance. Illustrate how they combine to create efficient transportation. 2. Describe the five modes of transportation, identifying the ...

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen