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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