Principles of Corporate Finance
13th Edition
ISBN: 9781260465099
Author: BREALEY, Richard
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 16, Problem 27PS
a)
Summary Introduction
To discuss: The statement that “Unlike country A firms, which are often being pressured by their shareholders to rise the dividends, country J companies pay out a much smaller proportion of earnings and so enjoy a lower cost of capital”.
b)
Summary Introduction
To discuss: The statement that “unlike new capital, which needs a stream of new dividends to service it,
c)
Summary Introduction
To discuss: The statement that “if a company repurchases stock instead of paying dividend, the number of shares falls and earnings per share increase. Thus stock repurchase should often be preferred to paying dividends”.
The share repurchase is the strategy by which companies will take back or buy back its own shares from the market place. If the management considered the shares are undervalued the company may buy back its shares.
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Students have asked these similar questions
According to the capital structure trade-off model:
O a. The optimal capital structure minimizes the company's weighted average cost of capital.
O b. There is no optimal capital structure, but instead there is a hierarchy of sources of capital.
O c.
There is no optimal capital structure, and companies should aim to maximize debt financing, since they thereby minimize their
tax payments.
O d. The optimal capital structure minimizes the company's market value.
O e. The optimal capital structure minimizes the company's cost of equity.
Is this statement true or false? Give a reason for your answer.
"The bird-in-hand theory suggests that a company can reduce its cost of equity capital by reducing its dividend payout ratio."
Which of the following statements is INCORRECT?
Cutting the firm's dividend to increase investment will raise the share price if, and only if, the new investments have a positive net present value (NPV).
If the firm retains more earnings, it will have less to payout to shareholders.
A firm will increase its share price by reducing the total payout to shareholders.
A firm can increase its growth rate by increasing its retention ratio.
Chapter 16 Solutions
Principles of Corporate Finance
Ch. 16 - Dividend payments In 2017, Entergy paid a regular...Ch. 16 - Dividend payments Seashore Salt Co. has surplus...Ch. 16 - Repurchases Look again at Problem 2. Assume...Ch. 16 - Repurchases An article on stock repurchase in the...Ch. 16 - Company dividend policy Here are several facts...Ch. 16 - Prob. 7PSCh. 16 - Information content of dividends What is meant by...Ch. 16 - Information content of dividends Does the good...Ch. 16 - Information content of dividends Generous dividend...Ch. 16 - Prob. 11PS
Ch. 16 - Payout policy in perfect capital markets Go back...Ch. 16 - Payout policy in perfect capital markets Go back...Ch. 16 - Payout policy in perfect capital markets Respond...Ch. 16 - Prob. 15PSCh. 16 - Repurchases and the DCF model Hors dAge...Ch. 16 - Repurchases and the DCF model Surf Turf Hotels is...Ch. 16 - Repurchases and the DCF model House of Haddock has...Ch. 16 - Repurchases and the DCF model Little Oil has 1...Ch. 16 - Repurchases and EPS Many companies use stock...Ch. 16 - Dividends and value We stated in Section 16-3 that...Ch. 16 - Payout and valuation Look back one last time at...Ch. 16 - Dividend clienteles Mr. Milquetoast admires Warren...Ch. 16 - Prob. 24PSCh. 16 - Payout and taxes Which of the following U.S....Ch. 16 - Prob. 26PSCh. 16 - Prob. 27PSCh. 16 - Prob. 28PSCh. 16 - Dividend policy and the dividend discount model...Ch. 16 - Prob. 30PS
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