Stock Market and Dividend Payout

Key Issue 2: Is $1b appropriate to enhance UST’s firm value and ultimately shareholder value?

As we can see from Exhibit 1 Linear Technology has been paying dividend steadily since 1992. Thus the pay-out policy is a large part in dividends. Its first dividend is paid in 1992.

3. Should Midland use a single corporate hurdle rate for evaluating investment opportunities in all of its divisions? Why of why not?

* b.  Further allocation of amounts allocated to repurchased shares to various components of stockholder equity upon formal or constructive retirement.

The strategies which are used by this company are not advantageous in the sense that most of the corporate debts in the organization usually carry considerable amounts of higher yields. Producing above average returns in the organization, with risk set a lower level than the normal risks would be an appropriate strategy which has to be used.

2) The way a firm chooses between alternate uses of free cash flow is referred to as

This paper will address penetrating the global marketplace and broaden the area of operations and sales for ToolsCorp Corporation. This paper will include the overall evaluation of this corporation and the long term strategic plan development. It will also include the corporation’s mission and vision statements.

3. What restructuring option – Icahn’s spin-off proposal or the company’s targeted stock proposal – will create the most value for shareholders? For creditors? For the firm’s other stakeholders?

The redemption available after the third anniversary of the original issue date is weighted towards equity. This option guarantees that the investors will receive at least the principal back. The mandatory redemption behaves like debt because there is a definite maturity date. The protective covenants are also weighted toward debt because the risk is limited and gives priority to the Series B Preferred Stockholders. Dividends are usually associated with equity; however, in this case the dividends are behaving more like debt interest payments. The dividends are paid at a fixed 8%

Dividend Policy | -Pay out dividend to shareholders in profitable period | -100% plowback to reinvest in the business |

It has the option to distribute the cash in the form of dividends. Shareholders were taxed on cash dividends at ordinary income rates whereas gains realized on shares that were repurchased received capital gains treatment.

By cutting dividends, FPL can react better to future threats. After an initial panic selling triggered by the news shock (FPL never cut its dividend in the past 47 years), investors will process the new information realized that the dividend cut is balanced by an increased growth rate in the future. To justify the HOLD recommendation on the

First, current payout policies directly increase payout ratio by issuing large amount of new shares. High payout ratio shows that the company has to spare a large amount of cash to pay dividends rather than invest in more profitable projects.

Ashley Swenson, Chief Financial Officer of Gainesboro Machine Tools Corporation had to submit a recommendation to the board of directors regarding the company’s dividend

The payout ratio is set at .30 from 2006 onwards. Notice that the long-term growth rate, which settles in between 2011 and 2012, is ROE × ( 1 – dividend payout ratio ) = .10 × (1 - .30) = .07.