Introduction 2 2.0 Dividend Irrelevant Theory 2 3.0 Company Listed at Bursa Malaysia 3 3.1 Zelan Berhad 3 3.2 FACB Industries Incorporated Berhad 4 3.3 Carlsberg Brewery Malaysia Berhad 5 3.4 Axiata Group Berhad 6 4.0 Others Factors Affect Dividend Policy 7 5.0 Impact of Tax on Dividend Policy 8 6.0 Conclusion 8 7.0 References 9 8.0 Appendix 10 1.0 Introduction Company may return to their shareholder by paying dividend or repurchasing back the shares. A company may
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tax shield. From my calculations, debt adds value to the company to the business operations, but not as significantly as with the added value of the tax shield. Problem Four In problem four, the new debt is equal to the cash paid out to repurchase shares. The calculations will
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earnings per share are: EPS = $37,500/5,000 shares EPS = $7.50 So, the cash flow for the shareholder is: Cash flow = $7.50(100 shares) Cash flow = $750 b. To determine the cash flow to the shareholder, we need to determine the EPS of the firm under the proposed capital structure. The market value of the firm is: V = $65(5,000) V = $325,000 Under the proposed capital structure, the firm will raise new debt in the amount of: D = 0.40($325,000) D = $130,000 This means the number of shares repurchased
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range Recent Price Current P/E Projected 2012 P/E 2009 EPS Projected 2012 EPS Dividend Yield Debt Rating Beta MCD NYSE Retailing - Foods Consumer Services Income & Capital Appreciation $71,153 M $53.88 - $71.84 $69.22 (7/9/2010) 15.59 14.27 $3.98 $ 3.33% AA0.61 Best profit margin in the industry Moderate Leverage Good dividend yield and earnings growth Attractive per-share earnings growth due to large share repurchases Significant internal exposure and shareholder focus Cons: Commodity cost risks
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respect except for capital structure. Both companies expect to earn $150 million in perpetuity, and both distribute all of their earnings as dividends. Levered’s perpetual debt has a market value of $300 million and the required return on its debt is 7%. Levered’s stock sells for $100 per share, and there are 5 million shares outstanding. Unlevered has 8 million shares outstanding worth $90 each. Unlevered has no debt. These firms operate in the Modigliani-Miller world with no taxes. How can you take advantage
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Session 2 Week 2 - FNCE 90062 Capstone Studies in Finance Session 2 Comparator Analysis “Comps” An opinion of value • A valuation is a well-founded opinion of value. It should be based on market evidence, but it is not a market result itself. • In some cases, the asset is not traded in an active market or exchange. e.g., privately held companies, real estate. Here, the concept of value may be different, depending on the type of valuation. (e.g., valuation for tax vs valuation
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EPS Earnings per Share * The number that is reported most frequently in the media and receives by far the most attention by investors and creditors is earnings per share. * Regulators impose standards to ensure the comparability of EPS across companies. * This seems simple, Earnings / Number of shares outstanding …but it’s not. Basic EPS * Earnings available to common shareholders for each share of stock outstanding.
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develop your skills in solving various financial problems through assessment of cases. TEXTBOOKS “Corporate Finance,” CFA© Program Curriculum 2013, Level II, Volume 3 Reading 25: Capital Budgeting Reading 26: Capital Structure Reading 27: Dividends and Share Repurchases: Analysis Reading 28: Corporate Governance Reading 29: Mergers and Acquisitions Cases - binder EVALUATION PROCEDURE Two In-Class Tests Case Analysis & Presentation Written Case Report Case Rebuttal & Class Contribution Final Exam Total
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Module 1 Financial Accounting for MBAs ------------------------------------------------- DISCUSSION QUESTIONS Q1-1. Organizations undertake planning activities that shape three major activities: financing, investing, and operating. Financing is the means a company uses to pay for resources. Investing refers to the buying and selling of resources necessary to carry out the organization’s plans. Operating activities are the actual carrying out of these plans. Planning is the glue that
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to 2013 from approximately $5 billion to $4.7 billion. To an investor this can be a concern because a mature and established company like Yahoo should be experiencing stable sales growth. Yahoo owns a very large stake in Alibaba. Therefore, as the share price of Alibaba increases, Yahoo reaps a larger return on investment. For example, Yahoo invested $1 billion dollars for a 40% stake in 2005 and is now worth tens on billions of dollars in total. Yahoo made a large patent sale to Alibaba in 2013 of
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