BMI’s East Division has a cost of capital of 20 percent. Selected financial information for the first year of business follows. Sales revenue $ 1,800,000 Income 340,000 Investment (beginning of year) 1,800,000 Current liabilities (beginning of year) 240,000 R&D expendituresa 600,000 a R&D (Research and Development) is assumed to benefit three years. All R&D is spent at the beginning of the year. East Division’s EVA (economic value added) is: A. $356,000 B. $260,000 C. $295,000 D. $108,000 E. $308,000
Dividend Policy
A dividend is a part of the profit paid to the shareholder in an organization. The management of the organization has the right to decide the policy for giving a dividend from the earnings to the shareholder. However, an organization is not in the obligation to declare a dividend for the investor. Dividend policy differs from organization to organization. As the management has the only authority to decide dividend rate, dividend amount, and time of dividend payout by considering all other elements that create an impact on the payment of a dividend.
Stocks And Dividends
Stock or equities are generally sold and bought in the Stock Exchange or which is popularly known as the stock market. Stocks are issued in the Stock Exchange for the sole purpose of raising funds for the Corporation or the company itself. Now since an individual has purchased a portion of the Corporation or company, he or she may claim to be a part of the earnings or profit of the company.
QUESTION 26
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BMI’s East Division has a cost of capital of 20 percent. Selected financial information for the first year of business follows.
Sales revenue
$
1,800,000
Income
340,000
Investment (beginning of year)
1,800,000
Current liabilities (beginning of year)
240,000
R&D expendituresa
600,000
a R&D (Research and Development) is assumed to benefit three years.
All R&D is spent at the beginning of the year.
East Division’s EVA (economic value added) is:
A. $356,000
B. $260,000
C. $295,000
D. $108,000
E. $308,000
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