Dividendpolicy-1

Dividendpolicy-1 - 250,000 1,100,000 = 22.72 2 Scholes...

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Name: ________Michael Samuels_____________________ Signature: ________________________________________ BADM 115 – Financial Management and Markets “Connecting the Dots” CASE 11 – Dividend Policy 1. Scholes Motors has a capital budget of $1,100,000, but it wants to maintain a target capital structure of 50% debt and 50% equity. The company expects to pay a dividend of $250,000. If the company follows a residual dividend policy, what is its forecasted dividend payout ratio?
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Unformatted text preview: 250,000 / 1,100,000 = 22.72% 2. Scholes Motors earned $5.00 per share in 2006, and paid a dividend of $2.00 per share. If it earns $5.50 in 2007 and follows a constant payout ratio policy, its dividend will be? 2 / 5 = .4 5.5 * .4 = 2.20 3. Scholes Motors earned $5.00 per share in 2006, and paid a dividend of $2.00 per share. If it earns $5.50 in 2007 and maintains a constant nominal payout policy, its payout ratio will be? 2.00 / 5.50 = 36.36%...
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This note was uploaded on 10/20/2010 for the course BADM 115 taught by Professor Bajeux during the Spring '08 term at GWU.

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