Questions and Problems

12.1 Furniture Depot, Inc., is an all-equity firm with a beta of 0.95. The market-risk premium is 9 percent and the risk-free rate is 5 percent. The company must decide whether or not to undertake the project that requires an immediate investment of 1.2 million and will generate annual after-tax cash flows of 340,000 at year-end for five years. If the project has the same risk as the firm as a whole, should Furniture Depot undertake the project 12.2 The returns for the past five years on...

Suggested Readings

The following articles are important for an understanding of how to make short-term financial decisions Sartoris, W. L., and N. C. Hill. Evaluating Credit Policy Alternatives A Present Value Framework. Journal of Financial Research 4 (Spring 1981), p. 1. _A Generalized Cash Flow Approach to Short-Term Financial Decisions. Journal of Finance 38 (May 1983), p. 3. Our treatment of the credit decision owes much to Bierman, H., Jr., and W. H. Hausman. The Credit Granting Decision. Management Science...

In Spite Of The Theoretical Argument That Dividend Policy Should Be Irrelevant The Fact Remains That Many Investors

Clienteles 515 Date of payment 497 Date of record 496 Declaration date 496 Ex-dividend date 496 Homemade dividends 501 Information-content effect 514 Regular cash dividends 495 Stock dividend 496 Stock split 496 Ross-Westerfield-Jaffe IV. Capital Structure and Corporate Finance, Sixth Dividend Policy Edition 1S. Dividend Policy Why Does It Matter Chapter 18 Dividend Policy Why Does It Matter The breakthrough in the theory of dividend policy is contained in Miller, M., and F. Modigliani....