An all - equity company has the following year - end market value balance sheet: Excess Cash
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Question:
An allequity company has the following yearend market value balance sheet:
Excess Cash $
Debt $
Other Assets $
Equity $ shares at $ per share
The firm is considering the following alternative uses of its excess cash:
Alternative : Payout cash dividends
Alternative : Repurchase its own stock
What will be the share price if the company chooses Alternative
What will be the share price if the company chooses Alternative
Suppose you own shares of the company's stock, and the company chooses Alternative What will you do to create a "homemade dividend" equal to the dividend amount you would have received under Alternative
Suppose you create the homemade dividend in Question How much difference will there be in the tax you will pay, compared to the tax you would have paid if the company had chosen Alternative
Assume that you had in the past purchased the shares you own at $ per share; the dividends received are taxed at and the capital gains are taxed at
Maive firm's capital structure has a debt ratio of and equity ratio of The firm's earnings at this yearend are $ The firm follows a residual dividend policy.
What is the maximum capital budget the firm can have without raising external equity?
Related Book For
Corporate Finance
ISBN: 9781265533199
13th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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