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Why are big oil’s big dividends are under threat in 250 words+?
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- D4 Please explain this quote! "Sometimes it takes longer to create value, but if companies generate more earnings, [their stocks' prices] will ultimately reflect that. ” ― Nelson PeltzWhy isn't the share price of a long-lasting company like Johnson & Johnson extremely high to reflect centuries of future cash flows? Because the share price already reflects all future cash flows Because the company has too much debt Because the WACC erodes the value of longer-term cash flowsWhat is the lowest dividend a firm could pay? What types of firms generally pay high dividends? Explain your answer.
- which one is correct please confirm? QUESTION 2 In the theoretical world of Miller and Modigliani, ____. a. a firm should pay out 100% of earnings as dividends to maximize shareholder wealth b. dividends are important only for their informational content c. dividends reduce investors’ uncertainty d. the marginal tax rates facing investors are the most important single determinant of dividend policyWould you expect a company in a rapidly growing technological industry to have a high or low dividend payout ratio?Which of the following is a diversifiable risk? Multiple Choice The risk that the economy will go into a recession The price of oil rising The risk that a company's CEO is killed in a plane crash Inflation The corporate tax rate rising by 5%
- 6 P10.4 Unlevering the Equity Cost of Capital-Low Leverage & High Leverage Companies: Below, we show the information for two potential comparable companies. Calculate the unlevered cost of capital based on the following assumptions. Neither company expects its free cash flows to grow. Income tax rate for interest (TINT). Value of debt Value of preferred stock. Value of equity Maturity of debt (years) Debt cost of capital. Preferred stock cost of capital. Equity cost of capital. Low Leverage Company High Leverage Company 35.0% $ 4,000 $ 1,000 $15,000 45.0% $45,000 $ 0 Perpetual $ 5,000 Perpetual 5.0% 8.0% 6.0% 11.8% 28.0% a. b. C. Assume that interest is tax deductible and that the discount rate for all interest tax shields is the unlevered cost of capital. Assume that interest is tax deductible and that the discount rate for all interest tax shields is the cost of debt. Assume that interest is tax deductible but that the company refinances its debt at the end of each year (annual…[multiple choice questions] INDO Inc. always pays all of its earnings as dividends, and therefore has no retained earnings. The same situation is expected to persist in the future. The company uses the CAPM to calculate its cost of equity. The targeted capital structure consists of: common stock, preferred stock, and debt. Which of the following events will reduce WACC? a. The market risk premium is decreasing. b. Flotation costs associated with issuing new common stock increase. c. The company's beta is increasing. d. Inflation is expected to increase. e. The flotation costs associated with issuing preferred stock increase.Is this statement true or false? Give a reason for your answer. "The bird-in-hand theory suggests that a company can reduce its cost of equity capital by reducing its dividend payout ratio."
- What make ROE(return on equity) of a company decrease further into negatives even though their financial leverage starts to rises? If a company multiplier for financial leverage starts to rise, what does it implies? Why?Is this statement true or false? Give a reason for your answer. "A company can always increase its stock price by increasing its dividend payout ratio."◦Do firms have any responsibilities to society at large? ◦Is stock price maximization good or bad for society? ◦Should firms behave ethically? Is stock price maximization the same as profit maximization?