FIN 401 Study Guide - Midterm Guide: Net Present Value, Capital Budgeting, Net Income
6 Mar 2015
School
Department
Course
Professor
Document Summary
Ni equity financing = million, paid out as dividends. Steps: residual dividend policy: ( firms focus is on capital structure : determine the capital budget, determine the optimal capital structure, undertake positive npv projects, any excess net income is paid out as dividend. Tender offer company states purchase price & # of shr. Open market no commitment buy openly. Company advantage: no ( ve) signals, stock price is maintained, flexibility. Shareholder advantage: only participate if you want to, capital gains taxed at a lower rate then dividends. Dps dividends paid ($)/# shares outstanding common stock price/share = total assets/ # shares. Eps (net income dividend on preferred stock) / avg outstanding shares. Dividend policy usually refers to how much of a firms net income is distributed as a dividend (dps/eps) Cash paid to shareholders, only some buyback a fraction of shares dividend: dividend: firm goes out of business. You own 100 shares & company declared a 10% stock dividend,
