The following companies are listed on the Lusaka Stock Exchange (LUSE) and operate in the manufacturing...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The following companies are listed on the Lusaka Stock Exchange (LUSE) and operate in the manufacturing sector. You have determined the amount of surplus cash for the year, after investment, generated by each firm and the dividend paid for the year. The average return on equity for the last 5 years is reported below and this is sustainable for the foreseeable future. Table 1: Summary of information on five companies on LUSE K million K million Surplus cash for Dividends paid ROE in the year Firm Beta the year A 55 35 8% 0.80 B 60 12 18% 1.30 -15 4% 1.25 20 12 2% 0.90 -5 8. 16% 1.05 The risk free rate of return is 7% and the average return on the market was 12%. Required As an institutional investor, what influence would you try to exert on management regarding the dividend? The following companies are listed on the Lusaka Stock Exchange (LUSE) and operate in the manufacturing sector. You have determined the amount of surplus cash for the year, after investment, generated by each firm and the dividend paid for the year. The average return on equity for the last 5 years is reported below and this is sustainable for the foreseeable future. Table 1: Summary of information on five companies on LUSE K million K million Surplus cash for Dividends paid ROE in the year Firm Beta the year A 55 35 8% 0.80 B 60 12 18% 1.30 -15 4% 1.25 20 12 2% 0.90 -5 8. 16% 1.05 The risk free rate of return is 7% and the average return on the market was 12%. Required As an institutional investor, what influence would you try to exert on management regarding the dividend?
Expert Answer:
Related Book For
Posted Date:
Students also viewed these accounting questions
-
What compound annual rate of return is required for an investment to double in: a. 12 years? b. 10 years? c. 8 years? d. 6 years? For each case, multiply the annual rate of return (in %) by the time...
-
The risk-free rate of return is currently 5 percent, and the market risk premium is 4 percent. The beta of the project under analysis is 1.4, with expected net cash flows estimated to be $1,500 per...
-
The risk free rate of interest on government securities in 2013 is 7.3% Required: Prepare a report for the directors of In Style Pty. Ltd assessing its: a) Profitability. b) Efficiency. |2013 |2012 y...
-
What has motivated you most since accepting your Omega Nu Lambda nomination to grow in your career development? Give an example
-
The Fidelity Growth & Income mutual fund received a three-star, or neutral, rating from Morningstar. Shown here are the quarterly percentage returns for the five-year period from 2001 to 2005...
-
(a) Derive the equation of motion for a mass-springdamper system in free vibration. Solve for the transient response \(x(t)\) that is driven by the initial conditions \(x(0)=x_{0}\) and...
-
How you may use computers for litigation support?
-
Cybernetronics Inc. (Cyber) is a Canadian-owned public company which designs and manufactures communications and control systems. The company's year end is May 31. It is now June 2018. You, CPA, are...
-
How Does Globalization Affect The Environment? https://ilearn.laccd.edu/courses/244326/files/folder/Course%20Materials/PowerPoint%20Slides?preview=42855164
-
David R. and Ella M. Cole (ages 39 and 38, respectively) are husband and wife who live at 1820 Elk Avenue, Denver, CO 80202. David is a regional sales manager for Wren Industries, a national...
-
Design, compile and run a C# program that decides and prints divisible if an input value is divisible by 10. Otherwise, print Not Divisible.
-
Hitzu Company sold a copler (that costs $3,500) for $7,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 3% of dollar sales. It records...
-
a) The density of Acetic acid is 1.05 g/mL and the density ofwater is 1.0 g/mL. The molar mass of Acetic Acid is 60.052 g/mol.What is the molarity of CH3COOH in water of a 5% acidity vinegarsolution?...
-
27. The conversion of calories to Joules is 1 cal = 4.184J. For calculations involving data having 2 significant figures,what value will be used for the number of joules in a calorie?Include units in...
-
1.1 1.2 Draw the sequence networks (indicating all the impedances) for the power system shown in Figure Q1, given that the base MVA is 80 MVA and base KV is 11kV on the zone of generator 1. Also...
-
On January 1, Mitzu Company pays a lump-sum amount of $2,700,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an...
-
Why did Garfield's assassination make civil service reform more urgent? Since the US was at war, the new president couldn't afford to take the time to appoint many civil servants, so they needed to...
-
The age-old saying for investing is "buy low and sell high," but this is easier said than done. Investors who panic about falling prices sell their investments, which in turn lowers the price and...
-
Clear Glass Companys investment banker has determined that the following rate schedule would apply if the firm raises funds by issuing new debt (bonds): Amount of New Debt Cost, r d $ 1 $ 250,000 .....
-
Do you think it is possible to construct a portfolio of stocks that has an expected return that equals the risk-free rate of return?
-
Analysts have evaluated the Sivar Silver Company and discovered that if sales are $800,000 the following will exist: Degree of operating leverage (DOL) 4.0X Degree of financial leverage (DFL) 2.0x...
-
Form small groups for this exercise on claim and adjustment letters. Have each member of your group study the following two letters. Meet and discuss your reactions to the two letters. How...
-
You work in the customer relations department of a company that makes plumbing supplies. The head of product development has just handed you the draft of installation instructions for a sliding tub...
-
Study the excerpt from the Micron data flyer (2010, p. 9). Describe the designers use of alignment as a design principle. How effective is it? How would you modify it? Present your analysis and...
Study smarter with the SolutionInn App