Stars LTD has achieved a record profit over the past financial year. Howeever, management is now faced
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Stars LTD has achieved a record profit over the past financial year. Howeever, management is now faced with a dilemma regarding what to do with thr excess profits. Some shareholders want the company to pay out as much of the profits as possible as dividends, whilst others want the company to reinvest the profits. Management is considering following a residual approach. The company has Rmillion in profits. The company raise of its capital recquirement through debt instruments, while it has million share outstanding. The company has a WACC of and the following projects on its books for the coming year
project X IRR: cost
project Y IRR: cost
project Z IRR: cost
determine the maximum dividend that stars LTD can pay out if it follows a strict residual pay out policy.
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
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