Calculate boehm total dividends

Assignment Help Financial Management
Reference no: EM131318005

Boehm Corporation has had stable earnings growth of 8% a year for the past 10 years and in 2013Boehm paid dividends of $2.6 million on net income of $9.8 million. However, in 2014 earnings areexpected to jump to $12.6 million, and Boehm plans to invest $7.3 million in a plant expansion. This onetimeunusual earnings growth won't be maintained, though, and after 2014 Boehm will return to itsprevious 8% earnings growth rate. Its target debt ratio is 35%. Calculate Boehm's total dividends for 2014 under each of the following policies:1.

(a) Its 2014 dividend payment is set to force dividends to grow at the long-run growth rate inearnings.

Reference no: EM131318005

Questions Cloud

The purchase of the new sprinkler system justified : RealTurf is considering purchasing an automatic sprinkler system for its sod farm by borrowing the entire $25,000 purchase price. The loan would be repaid with four equal annual payments at an interest rate of 12%/year. Based on an internal rate of r..
What are the sources of agency problems in smes : 1. Discuss how accounting beta is likely to be impacted by high leverage and high fixed costs. 2. Explain the issues involved in determining the most appropriate discount rate to use in an SME's DCF calculation 3. Explain how corporate governance is ..
What is the project net present value : 1. The firm has a 75% chance if it invests -$1,500 a return of $500 for 7-years, and a 25% chance of returning $25 for 7-years. Assuming that all cash flows are discounted at 10%. Based on the above data, what is the project's net present value?
Decided to withdraw the remaining money : Mr. Smith has saved $1,200 each year for 25 years. A year after the saving period ended, Mr. Smith withdrew $4,500 each year for a period of 5 years. In the sixth and seventh years, he only withdrew $3,000 per year. In the eighth year, he decided to ..
Calculate boehm total dividends : Calculate Boehm's total dividends for 2014 under each of the following policies:1. (a) Its 2014 dividend payment is set to force dividends to grow at the long-run growth rate inearnings.
What creates power in context of supply chain collaboration : In your words, describe and illustrate the great divide. Do you believe the great divide phenomenon is as widely experienced as the text indicates? Support your position with an illustration.
What was the highest dividend yield over the past year : Find the quote for the Laclede Group. Assume that the dividend is constant. What was the lowest dividend yield over the past year? What was the highest dividend yield over the past year?
Expected market risk premium : Porter Inc's stock has an expected return of 10.75%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 5%, what is the expected market risk premium?
What is the economic break-even point of sale : Ares, Inc, has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of five years. The depreciation schedule for the machine is straight-line and there is no anticipated salvage value. Assume that t..

Reviews

Write a Review

Financial Management Questions & Answers

  The hedge ratio for a perfect hedge

Assume a stock is currently selling for $73.50. You consider a call option to hedge your long position in the security. The current exercise price for the option is $75.00. Using a 1 year period, a rate of 5.5%, and an “up” factor of 1.20, and a “dow..

  How much will we need in foundation grants

How much will we need in foundation grants this year to make the purchase break-even financially?- Are the payments from the county sufficient?

  IRR of the after-tax cash flow for this mining project

Keystone Energy Company is considering a $30 million investment in a Pennsylvania coal mine. Mining engineers estimate that the mine contains 7,500,000 tons of commercial-grade, economically minable coal. Determine the PW and IRR of the after-tax cas..

  Calculate the weighted average of the different bonds

How do I Calculate the weighted average of the different bonds YTMs and determine the total market value of the bonds outstanding?

  What is the risk structure of interest rates

What is the risk structure of interest rates? How is risk defined in a financial sense? Discuss the general relationship between risk and expected return.

  Calculate the operating cash flows for the new project

Assume that a new project will annually generate revenues of 1,800,000 and cash expenses (including both fixed and variable costs) of 600,000 while increasing depreciation by 190,000 per year. In addition, the firm’s tax rate is 37%. Calculate the op..

  What is the operating cash flow for the project

You are evaluating a project for your company. You estimate the sales price to be $210 per unit and sales volume to be 3,100 units in year 1; 4,100 units in year 2; and 2,600 units in year 3. The project has a three-year life.  The tax rate is 35 per..

  Calculate the weighted average cost of capital

A firm wishes to explore the effect on its cost of capital of the rate at which the company pays taxes. the firms wishes to maintain a capital structure of 25% debt, 15% preferred stock, and 60% common stock. The cost of financing with retained earni..

  What is the effective interest cost to the borrower

John wants to buy a property for $105,000 and wants an 80% loan. The lender indicates that a fully amortizing loan can be obtained for 30 years at 12% MEY, with loan origination fees (all lender controlled fees) of $3,500. What is the effective inter..

  What is the weighted average cost of capital

Delta Lighting has 30,000 shares of common stock outstanding at a market price of $15 a share. This stock was originally issued at $31 per share. The firm also has a bond issue outstanding with a total face value of $280,000 which is selling for 86 p..

  Operates landfills for several municipalities

Star Industries owns and operates landfills for several municipalities throughout the U.S. Midwest. Star typically contracts with the municipality to provide landfill services for a period of 20 years. The firm then constructs a lined landfill (requi..

  Cost of capital and capital structure

Tea&Juices, a foreign producer of soft drinks, is considering expanding its activities to Canada. To evaluate the profitability of the business, the management has decided to use as benchmarks two other foreign producers of soft drinks who have alrea..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd