[10] True or False (Provide explanation). The dividend discount model may be used even if a company does not pay dividends regularly.
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Q: True False
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Q: share price
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[10] True or False (Provide explanation). The dividend discount model may be used even if a company does not pay dividends regularly.
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- [6] True or False (Provide explanation). A common share with an expected zero dividend growth rate would be valued similarly as preferred share, that is, the expected dividend divided by the cost of capital.Which is true of equity financing? It has no fixed maturity date It provides a tax shield It offers creditors no cushion against losses Struggling companies still need to pay dividendsWhich of the following statements about payout policy is FALSE? a. Share repurchases concentrate ownership in the hands of the remaining shareholders, making their shares worth more than they were before the repurchase. b. Firms should generally pay out no more than their free cash flow to equity, unless they are in the process of paying out a large cash balance. c. Dividends typically increase at a slower rate than earnings. d. Firms today return more cash to shareholders through repurchases than through dividends. e. Dividends are lower for firms that have higher growth rates.
- 5 Which of the following would not affect a company's net income? A change in the company's income taxes Changing the selling price of a company's product Paying a dividend to stockholders Advertising a new productCompanies are far more reluctant to cut dividend than to increase them. Why might this be the case? What are the implications for financial markets when firms announce that they will be cutting dividends?Dividends do not properly measure the value created by a company. True OR False PLEASE explain
- 3. Which of the below theories argues that dividend payment decisions are driven by investor demand? Modigliani and Miller (1961) Shefrin and Statman (1984) Jensen (1986) Lintner (1956) Baker and Wurgler (2004)The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you’ve done in previous problems, but it focuses on a firm’s free cash flows (FCFs) instead of its dividends. Some firms don’t pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Charles Underwood Agency Inc. has an expected net operating profit after taxes, EBIT(1 – T), of $17,400 million in the coming year. In addition, the firm is expected to have net capital expenditures of $2,610 million, and net operating working capital (NOWC) is expected to increase by $30 million. How much free cash flow (FCF) is Charles Underwood Agency Inc. expected to generate over the next year? $14,820 million $19,980 million $321,693 million $14,760 million…What are some major advantages to cash dividends that simply aren’t available through share repurchases.?
- Please explain the rationale why "There is no constant growth in dividends" in your example? Thanks.Explain why the following statement is wrong (1 paragraph maximum): "The main reason why some companies prefer to return cash to shareholders through stock repurchases, rather than dividends, is because repurchases reduce the number of share outstanding and thus tend to increase the stock price."The _______________theory hypothesizes that the amount of dividends should not be the focus of the company, but that the company should simply declare a dividend from the earnings not currently needed for earmarked projects. This theory leads to erratic and unpredictable dividends.