The following companies are listed on the Lusaka Stock Exchange (LUSE) and operate in the manufacturing...

  

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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?