Managerial Finance Essay

Managerial Finance Problem Review Set Dividends Policy 1) If a warm adopts a rest period distribution policy, distributions are determined as a residual after funding the crown budget. Therefore, the better the securelys investment opportunities, the lower its pay come forth ratio should be. a. authoritative b. False 2) steady if a shoot split has no information content, and even if the dividend per fate adjusted for the split is not subjoind, there can still be a real benefit (i. e. , a higher value for shareholders) from such a split, but any such benefit is probably small. a. True b. False 3)Which of the following should NOT influence a firms dividend policy decision? a. The firms ability to accelerate or delay investment projects. b. A strong preference by closely shareholders for current cash income versus capital gains. c. Constraints imposed by the firms bond indenture. d. The fact that much of the firms equipment has been leased or else than bought and owned. e. The fact that Congress is considering castrates in the tax law regarding the taxation of dividends versus capital gains. 4) Which of the following would be most likely to lead to a minify in a firms dividend payout ratio? a.Its earnings plough more stable. b. Its access to the capital markets increases. c. Its RD efforts pay off, and it instantly has more high-return investment opportunities. d. Its accounts receivable decrease due to a change in its credit policy. e. Its stock price has increased over the delay year by a greater percentage than the increase in the broad stock market averages. 5) If a firm adheres strictly to the residual dividend policyThe stronger management thinks the clientele effect is, the more likely the firm is to adopt a strict version of the residual dividend model. d. Large stock repurchases financed by debt tend to increase earnings per share, but they also increase the firms financial risk. e. A dollar paid out to repurchase stock is taxed at the same rate as a dollar paid out in dividends. Thus, both companies and investors are so-so(p) between distributing cash through dividends and stock repurchase programs. 7) PD Co. has a capital budget of $1,000,000. The company wants to maintain a fool capital structure which is 30% debt and 70% equity.