financial management

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. 👍 0
  2. 👎 0
  3. 👁 176
  1. 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

    1. 👍 0
    2. 👎 0

Respond to this Question

First Name

Your Response

Similar Questions

  1. investing

    Which of the following statements is true about financial planning? A. Any kind of financial expert (such as a stockbroker, lawyer, or accountant) can help you develop a comprehensive financial plan. B. Once you have painstakingly

  2. Math

    How would you solve this word problem in one variable inequality form? One cell phone company offers a plan that costs $29.99 and includes unlimited night and weekend minutes. Another company offers a plan that costs $19.99 and

  3. financial managerial accounting

    Boeing Company is the largest manufacturer of commercial aircraft in the United States and is a major employer in Seattle, Washington. Explain why each of the following individuals or organizations would be interested in financial

  4. linear programming

    The Pyrotec Company produces three electrical products-clocks, radios and toasters. These products have the following resources requirements : Resource Requirements Cost/Unit Labor Hours/Unit Clock $7 2 Radio 10 3 Toaster 5 2 The

  1. Accounting 1

    Match each of the following characteristics that describe financial accounting, managerial accounting, both financial and managerial accounting, or neither financial nor managerial accounting. A. Financial accounting B. Managerial

  2. Accounting

    Problem 9-5 Warranties Bombeck Company sells a product for $1500. When the customer buys it, Bombeck provides a one-year warranty Bombeck sold 120 products during 2010. Based on analysis of past warranty records, Bombeck estimates

  3. World History

    The _[blank]_ was a company chartered by Queen Elizabeth I for trade with Asia that maintained control over India from 1757 to 1858. Which most accurately completes the sentence? A: British East India Company B: Emden Company C:

  4. Personal Finance

    The financial planning process concludes with efforts to: A. review and revise your actions. B. create a financial plan of action. C. analyze your current personal and financial situation. D. review the financial plan. I believe

  1. Check Business

    4. Which of the following companies faces the problem of undercapitalization? A large corporation that has been hit with a major lawsuit because one of its products has a design flaw that has led to serious injuries. A small new

  2. math

    setup an equation or expression to model the situation below: in one year, sales for a company increase at a constant rate. after two months, the company sells 12,500 products, and after 8 months, the company sells 30,000

  3. XMGT/216

    As the senior executive charged with bringing Little Company into the corporate fold, how do you proceed? What are your obligations to Big Company, Little Company, and the customers of both? What do you owe to shareholders and the

  4. Business Communication

    Which of the following is an example of an external source? I. Memos sent to the employees of a company, 2. Financial reports published by a company, 3. Company databases, and 4. Industry journals.

You can view more similar questions or ask a new question.