Brutus Co. expects an EPS of $10 per share next period. Curr…

Brutus Co. expects an EPS of $10 per share next period. Currently, their plowback ratio is 0.5. However, the company has the opportunity to finance a new project that will earn an ROE of 9% by cutting its dividend to $2.50 per share. If the Brutus Co’s expected stock return is 9%, should they cut dividends to make the new investment?

Brutus Company has announced plans to acquire Buckeye Enterp…

Brutus Company has announced plans to acquire Buckeye Enterprises. Brutus is trading for $25 per share and Buckeye is trading for $30 per share, with a pre-merger value for Buckeye of $3 billion dollars. If the projected synergies from the merger are $650 million, what is the maximum exchange ratio that Brutus could offer in a stock swap and still generate a positive NPV?