James Holliday_Week1Assignment_FI516

# James Holliday_Week1Assignment_FI516 - = \$3,960,000 Extra...

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James Holliday Week 1 Assignment Problem 14-10 a) 1. 2011 Dividends = (1.10) x (2010 Dividends) = (1.10)(\$3,600,000) = \$3,960,000 2. 2010 Payout = \$3,600,000/\$10,800,000 = 0.33 or 33% 2011 Dividends = (0.33) x (2009 Net income) = (0.33)(\$14,400,000) = \$4,800,000 3. Equity financing = (\$8,400,000)(0.60) = \$5,040,000 2011 Dividends = Net income - Equity financing = \$14,400,000 - \$5,040,000 = \$9,360,000 4. Regular dividends = (1.10) x (\$3,600,000)

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Unformatted text preview: = \$3,960,000 Extra dividend = \$9,360,000 - \$3,960,000 = \$5,400,000 b) Policy 4 because it could correct capital budget and financing of that budget while also correctly informing investors. c) Yes Problem 19-6 a) b) c) d) e) Alternative 3 is the best option if the funds are invest for the 20% yield and the owner is willing to take the risk of higher leverage....
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