Question: As an investor would you rather invest in a firm
As an investor, would you rather invest in a firm that has a policy of maintaining (1) a constant payout ratio, (2) a stable, predictable dividend per share with a target dividend growth rate, or (3) a constant regular quarterly dividend plus a year-end extra payment when earnings are sufficiently high or corporate investment needs sufficiently low? Explain your answer, stating how these policies would affect your required rate of return, rs. Also, discuss how your answer might change if you were a student, a 50-year-old professional with peak earnings, or a retiree.
Answer to relevant QuestionsAssume that asymmetric information exists in the financial markets. If a firm’searnings fluctuate every year, everything else being equal, which of the dividendpolicies discussed in the chapter should be followed to ...a. Given the following information, calculate the expected value for Firm C’s EPS. E(EPSA) = $5.10 and σA = $3.61; E(EPSB) = $4.20 and σB = $2.96; and σC = $4.11.b. Discuss the relative riskiness of the three ...Use the model in File C14 to work this problem.a. Rework Problem 14-13, assuming that the old long-term debt will not remain outstanding, but rather must be refinanced at the new long-term interest rate of 12 percent. What ...Describe the cash conversion cycle. How can a financial manager use knowledge of the cash conversion cycle to better manage the firm’s working capital?Wally’s Motors generally has inventory that equals $48 million. If the inventory turnover for the company is 8, what is its (a) Inventory conversion period (b) Cost of goods sold?
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