Pros and cons of announcing the future dividend policy Introduction: Dividend Policy: It is the rules and regulations or protocol, which a company sets to share its earning with its shareholders. Dividend payment includes the payment to be made legally as well as financially.

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Answer 1

Question

Chapter 14, Problem 1Q

Summary Introduction

To Explain: Pros and cons of announcing the future dividend policy

Introduction:

Dividend Policy: It is the rules and regulations or protocol, which a company sets to share its earning with its shareholders. Dividend payment includes the payment to be made legally as well as financially.

Expert Solution & Answer

Answer to Problem 1Q

There is various benefit of pre announcing the dividend policy but the most vital is that it minimizes the investor’s uncertainty.

Explanation of Solution

As the uncertainty decreases it results in lowering capital costs and the increase in stock prices resulted in benefitting the directors as well as the company.
Pre announcing dividend policy has some side effects too as it resulted in reducing the corporate flexibility.

Conclusion

As it has both negative and positive effect but it is better for the director’s to pre announce the dividend policy.

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General Finance Question

Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes): Income Statement Balance Sheet Sales Costs $ 40,000 Assets 34,160 $26,000 Debt Equity $ 7,000 19,000 Net income $ 5,840 Total $26,000 Total $26,000 The company has predicted a sales increase of 20 percent. Assume Yoo pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) Pro forma income statement Sales Costs $ 48000 40992 Assets $ 31200 Pro forma balance sheet Debt 7000 Equity 19000 Net income $ 7008 Total $ 31200 Total 30304 What is the external financing needed? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.) External financing needed $ 896

Answer 2

Question

Chapter 14, Problem 1Q

Summary Introduction

To Explain: Pros and cons of announcing the future dividend policy

Introduction:

Dividend Policy: It is the rules and regulations or protocol, which a company sets to share its earning with its shareholders. Dividend payment includes the payment to be made legally as well as financially.

Expert Solution & Answer

Answer to Problem 1Q

There is various benefit of pre announcing the dividend policy but the most vital is that it minimizes the investor’s uncertainty.

Explanation of Solution

As the uncertainty decreases it results in lowering capital costs and the increase in stock prices resulted in benefitting the directors as well as the company.
Pre announcing dividend policy has some side effects too as it resulted in reducing the corporate flexibility.

Conclusion

As it has both negative and positive effect but it is better for the director’s to pre announce the dividend policy.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 14, Problem 1Q

Summary Introduction

To Explain: Pros and cons of announcing the future dividend policy

Introduction:

Dividend Policy: It is the rules and regulations or protocol, which a company sets to share its earning with its shareholders. Dividend payment includes the payment to be made legally as well as financially.

Expert Solution & Answer

Answer to Problem 1Q

There is various benefit of pre announcing the dividend policy but the most vital is that it minimizes the investor’s uncertainty.

Explanation of Solution

As the uncertainty decreases it results in lowering capital costs and the increase in stock prices resulted in benefitting the directors as well as the company.
Pre announcing dividend policy has some side effects too as it resulted in reducing the corporate flexibility.

Conclusion

As it has both negative and positive effect but it is better for the director’s to pre announce the dividend policy.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 14, Problem 1Q

Summary Introduction

To Explain: Pros and cons of announcing the future dividend policy

Introduction:

Dividend Policy: It is the rules and regulations or protocol, which a company sets to share its earning with its shareholders. Dividend payment includes the payment to be made legally as well as financially.

Expert Solution & Answer

Answer to Problem 1Q

There is various benefit of pre announcing the dividend policy but the most vital is that it minimizes the investor’s uncertainty.

Explanation of Solution

As the uncertainty decreases it results in lowering capital costs and the increase in stock prices resulted in benefitting the directors as well as the company.
Pre announcing dividend policy has some side effects too as it resulted in reducing the corporate flexibility.

Conclusion

As it has both negative and positive effect but it is better for the director’s to pre announce the dividend policy.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 14, Problem 1Q

Summary Introduction

To Explain: Pros and cons of announcing the future dividend policy

Introduction:

Dividend Policy: It is the rules and regulations or protocol, which a company sets to share its earning with its shareholders. Dividend payment includes the payment to be made legally as well as financially.

Expert Solution & Answer

Answer to Problem 1Q

There is various benefit of pre announcing the dividend policy but the most vital is that it minimizes the investor’s uncertainty.

Explanation of Solution

As the uncertainty decreases it results in lowering capital costs and the increase in stock prices resulted in benefitting the directors as well as the company.
Pre announcing dividend policy has some side effects too as it resulted in reducing the corporate flexibility.

Conclusion

As it has both negative and positive effect but it is better for the director’s to pre announce the dividend policy.

Answer 6

Chapter 14, Problem 1Q

Summary Introduction

To Explain: Pros and cons of announcing the future dividend policy

Introduction:

Dividend Policy: It is the rules and regulations or protocol, which a company sets to share its earning with its shareholders. Dividend payment includes the payment to be made legally as well as financially.

Expert Solution & Answer

Answer to Problem 1Q

There is various benefit of pre announcing the dividend policy but the most vital is that it minimizes the investor’s uncertainty.

Explanation of Solution

As the uncertainty decreases it results in lowering capital costs and the increase in stock prices resulted in benefitting the directors as well as the company.
Pre announcing dividend policy has some side effects too as it resulted in reducing the corporate flexibility.

Conclusion

As it has both negative and positive effect but it is better for the director’s to pre announce the dividend policy.

Answer 7

Chapter 14, Problem 1Q

Summary Introduction

To Explain: Pros and cons of announcing the future dividend policy

Introduction:

Dividend Policy: It is the rules and regulations or protocol, which a company sets to share its earning with its shareholders. Dividend payment includes the payment to be made legally as well as financially.

Answer 8

Expert Solution & Answer

Answer to Problem 1Q

There is various benefit of pre announcing the dividend policy but the most vital is that it minimizes the investor’s uncertainty.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

As the uncertainty decreases it results in lowering capital costs and the increase in stock prices resulted in benefitting the directors as well as the company.
Pre announcing dividend policy has some side effects too as it resulted in reducing the corporate flexibility.

Answer 12

Conclusion

As it has both negative and positive effect but it is better for the director’s to pre announce the dividend policy.

Answer 13

Ch. 14 - Prob. 1Q Ch. 14 - The cost of retained earnings is less than the...Ch. 14 - Would it ever be rational for a firm to borrow...Ch. 14 - Modigliani and Miller (MM), on the one hand, and...Ch. 14 - How would each of the following changes tend to...Ch. 14 - One position expressed in the financial literature...Ch. 14 - Prob. 7Q Ch. 14 - What is the difference between a stock dividend...Ch. 14 - Most firms like to have their stock selling at a...Ch. 14 - Indicate whether the following statements are true...

Pros and cons of announcing the future dividend policy Introduction: Dividend Policy: It is the rules and regulations or protocol, which a company sets to share its earning with its shareholders. Dividend payment includes the payment to be made legally as well as financially.

To Explain: Pros and cons of announcing the future dividend policy Introduction: Dividend Policy: It is the rules and regulations or protocol, which a company sets to share its earning with its shareholders. Dividend payment includes the payment to be made legally as well as financially.

Answer to Problem 1Q

Explanation of Solution

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Chapter 14 Solutions

To Explain: Pros and cons of announcing the future dividend policy

Introduction:

Dividend Policy: It is the rules and regulations or protocol, which a company sets to share its earning with its shareholders. Dividend payment includes the payment to be made legally as well as financially.