Principles of Corporate Finance
Principles of Corporate Finance
13th Edition
ISBN: 9781260465099
Author: BREALEY, Richard
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 16, Problem 23PS

Dividend clienteles Mr. Milquetoast admires Warren Buffett and believes that Berkshire Hathaway is a good investment. He wants to invest $100,000 in Berkshire Hathaway B shares but hesitates because Berkshire Hathaway has never paid a dividend. He needs to generate $5,000 per year in cash for living expenses. What should Mr. Milquetoast do?

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3.Mr. Wise Sapi invested 50M in the common shares of Profitable Ventures, Inc. What if the guaranteed return for this investment is 5M and prior to the issuance of dividends, the management decided to retain all earnings. What will make Mr. Sapi happy? (the tenor must be in the context of investment)  A. If his increased capitalization will allow him to extract returns higher than the prevailing market rate B. If his increased capitalization will allow him to extract returns equal to the prevailing market rate C. If his increased capitalization will allow him to extract returns lower than the prevailing market rate D. If he will receive 5M as dividends
Benjamin Garcia’s start-up business is succeeding, but he needs $200,000in additional funding to fund continued growth. Benjamin and an angelinvestor agree the business is worth $800,000 and the angel has agreed toinvest the $200,000 that is needed. Benjamin presently owns all 40,000shares in his business. What is a fair price per share and how many additional shares must Benjamin sell to the angel? Because the stock will besold directly to an investor, there is no spread; the other flotation costsare insignificant.
You have started a company and are in luck—a venture capitalist has offered to invest. You own 100% of the company with 4.56 million shares. The VC offers $1.03 million for 820,000 new shares. b. What is the​ post-money valuation? c. What fraction of the firm will you own after the​ investment?
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Dividend explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=Wy7R-Gqfb6c;License: Standard Youtube License