financial management

posted by john

The HighT Company is a manufacturer of electronic products. The company is preparing a financial plan for the coming year and has the following independent projects under consideration:
Project
Initial investment ($ millions)
Internal rate of return (%)
A
220
20
B
380
11
C
300
15
D
200
19
E
215
8
Assume these projects have the same risk as the overall company and the cost of capital, which is 12%. HighT predicts that earnings in the coming year will be $234 million. The company has 12 million shares outstanding, and maintains a debt-equity ratio of three.
a Determine HighT’s total planned capital expenditure for the coming year. Explain your answer. (8 marks)
b Suppose the company follows a residual dividend policy. What will the dividend per share be? (8 marks)
c What are the major advantages and disadvantages of a strict residual dividend policy? How does a compromise policy differ from a strict residual policy? (9 marks

  1. SraJMcGin

    1. (a) Try some of the following links for planned capital expenditure:

    http://search.yahoo.com/search?fr=mcafee&p=how+to+determine+total+planned+capital+expenditure

    2. Try some of these for dividend policy:

    http://search.yahoo.com/search?fr=mcafee&p=how+to+figure+the+dividend+from+a+residual+dividend+policy

    3. And h ere for strict residual dividend policy:

    http://search.yahoo.com/search?fr=mcafee&p=advantages+%26+disadvantages+of+a+strict+residual+policy

    Sra

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