Milestone 2

.docx

School

University of West Alabama *

*We aren’t endorsed by this school

Course

300

Subject

Finance

Date

Apr 3, 2024

Type

docx

Pages

4

Uploaded by karnasandesh7

Report
Milestone 2 Stock Valuation From 2020-2022, the dividends per share for Lowe’s (LOW) increased on an average of $0.225. Between the years 2021-2022 the dividend payout increased to $.25 per share from previous year giving the Lowe’s stockholder $1.05 payout per share they owned. They saw an increase in the dividend payout as well as the yield, with the yield hovering around 1.4% the prior two year before jumping to 2.2% in 2022. These circumstances creates an understanding of an increase in shareholders equity. This makes sense as stock dividends increase the total number of outstanding shares of a corporation. These dividends reduce the shareholder's equity since cash is being dispersed. The quantity of equity owned by shareholders is essentially decreased by the dividend payments, for most part, not always the case. (Bank, 2022) We would anticipate that the shareholder equity and value would remain the same when calculating the stock split. A corporation provides its shareholders an extra share for each share they currently possess during a stock split, increasing both the number of shares that are outstanding and the total number of shares that owners own. Since the firm does not get any more funding for the new shares, the stock split has no effect on shareholder value. Because the shareholder is receiving two shares, which are equal to the value of one share prior to the split, the shareholder value likewise stays intact. (Scilly, 2022) Although dividend payments to shareholders might be advantageous, they can either help or impede a company's ability to expand. Offering dividends to shareholders and maintaining
financial stability can assist a business draw in new investors and provide money for expansion. This money is only made available if the business attracts additional investors. However, paying dividends may impede a company's ability to expand. Because the corporation is using less cash to pay out the dividend, this might impede growth. The amount of money paid to shareholders rises with each dividend delivery, while corporate expenditures also rise. Bond Issuance We would anticipate some variations when doing the computations with the bond's market rate increased and decreased. It would be expected that the bond's present value would decline as the market rate climbed. This decline is to be expected as the bond's existing fixed interest rate results in lesser payments than what the market is willing to pay. Conversely, when the market rate drops, we would anticipate that the bond's present value would rise. This is to be expected since the bond is producing fixed interest payments that are more than what the market is demanding. It would not be advantageous for a business to issue bonds at a period when the market rate decrease. When a company wants to raise funds, it has access to a wealth of options. One of the several ways a firm might do this is by issuing bonds. In comparison to selling shares or taking out fresh loans, this might be considered a preferable option. A business establishes a loan with an investor or group of investors when it issues a bond. Because the investor is committing to provide the business a certain amount for a predetermined amount of time, this is an excellent approach for a firm to get funds. Because the interest rate that the firm pays the investor is
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