Business, 21.04.2020 18:49 pchisholm100

Boehm Corporation has had stable earnings growth of 8% a year for the past 10 years and in 2016 Boehm paid dividends of $2.6 million on net income of $9.8 million. However, in 2017 earnings are expected to jump to $12.6 million, and Boehm plans to invest $7.3 million dollars in a plant expansion. This one time unusual earnings growth won’t be maintained, though, and after 2017 Boehm will return to its previous 8% earnings growth rate. Its target debt ratio is 35%.A. Calculate Boehm’s total dividends for 2017 under each of the following policies:(1) Its 2017 dividend payment is set to force dividends to grow at the lung-run growth rate earnings.(2) It continues the 2016 dividend payout rates.(3) It uses a pure residual policy with all distributions in the form of dividends (35% of the $7.3 million investment is financed with debt).(4) It employs a regular-dividend-plus-extras policy, with a regular dividend being based on the long run growth rate and the extra dividends being set according to the residual policy. B. Which of the following proceeding policies would you recommend? Restrict your choices to the ones listed, but justify your answer. C. Does a 2017 dividends of $9 million seems reasonable in view of your answers to Parts A and B? If not, should the dividends be higher or lower?

Answers: 3

Show answers

Another question on Business

Business, 22.06.2019 17:30

Costco wholesale corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 471 locations across the u.s. as well as in canada, mexico and puerto rico. as of its fiscal year-end 2005, costco had approximately 21.2 million members. selected fiscal-year information from the company's balance sheets follows. ($ millions). selected balance sheet data 2005 2004 merchandise inventories $4,015 $3,644 deferred membership income (liability) 501 454 (a) during fiscal 2005, costco collected $1,120 cash for membership fees. use the financial statement effectstemplate to record the cash collected for membership fees. (b) in 2005, costco recorded $46,347 million in merchandise costs (that is, cost of goods sold). record thistransaction in the financial statement effects template. (c) determine the value of merchandise that costco purchased during fiscal-year 2005. use the financial statementeffects template to record these merchandise purchases. assume all of costco's purchases are on credit.

Answers: 3

Answer

Business, 23.06.2019 17:20

Consider two cigarette companies, pm inc. and brown inc. if neither company advertises, the two companies split the market and earn $50 million each. if they both advertise, they again split the market, but profits are lower by $10 million since each company must bear the cost of advertising. yet if one company advertises while the other does not, the one that advertises attracts customers from the other. in this case, the company that advertises earns $60 million while the company that does not advertise earns only $30 million. if these two companies collude and agree upon the best joint strategy, a. neither company will advertise. b. both companies will advertise. c. pm inc. will advertise but brown inc. will not. d. brown inc. will advertise but pm inc. will not.

Answers: 1

Answer

Business, 23.06.2019 21:00

The word "restaurant" makes people think of a building where you go to eat. like all words, "restaurant" is an example of a

Answers: 2

Answer

Business, 23.06.2019 22:40

How did the study organizers fix the game of monopoly to ensure certain players win?

Answers: 2

Answer

You know the right answer?

Boehm Corporation has had stable earnings growth of 8% a year for the past 10 years and in 2016 Boeh...