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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 12% 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?

Corporate payout policy refers to:

Brutus Manufacturing has earnings per share (EPS) of $2.00, 4 million shares outstanding, and a share price of $30.  Brutus is considering buying Fisher Industries, which has earnings per share of $1.80, 2 million shares outstanding, and a share price of $15. Brutus will pay for Fisher by issuing new shares. There are no expected synergies from the transaction. If Brutus pays no premium to acquire Fisher, what will the earnings per share be after the merger?

Assume Brutus Co. has $20 million in excess cash and no debt. The firm expects to generate additional free cash flows of $48 million per year in subsequent years which they can pay out as a dividend. If Brutus’s unlevered cost of capital is 12%, then the enterprise value of its ongoing operations is PV(FCFs) = $48 million/12% = $400 million.Brutus’s board is meeting to decide how to pay out its $20 million in excess cash to shareholders. The board is considering two options: 1) Use the $20 million to pay a $2 cash dividend for each of Brutus’s 10 million outstanding shares2) Repurchase shares instead of paying a dividend In perfect capital markets, which would investors prefer?

Assume Brutus Co. has $50 million in excess cash and no debt. The firm expects to generate additional free cash flows of $60 million per year in subsequent years which they can pay out as a dividend. If Brutus’s unlevered cost of capital is 15%, then the enterprise value of its ongoing operations is PV(FCFs) = $60 million/15% = $400 million.Brutus’s board is meeting to decide how to pay out its $50 million in excess cash to shareholders. The board is considering two options: 1) Use the $50 million to pay a $5 cash dividend for each of Brutus’s 10 million outstanding shares2) Repurchase shares instead of paying a dividend In perfect capital markets, which would investors prefer?

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A firm has a total market value of assets of $300 million that includes $60 million of cash and 8 million shares outstanding. If the firm uses $30 million of its cash to repurchase shares, what is the new price per share? (Assume perfect capital markets.) 

The fact that a large company can enjoy savings from producing goods in high volume that are not available to a small company is called ________.

Individuals with what medical condition have a reduction of air pressure needed to adequately support speech?

Brutus Buckeye industries is expected to pay a $3.00 dividend at the end of this year. If you expect the company’s dividend to grow by 6% per year forever and the company’s equity cost of capital to be 13%, then the value of a share of the company’s stock is closest to ________.