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Problem 6-11 This is a more difficult but Informative problem. James Brodrick & Sons, Incorporated, is growing rapidly and, if at all possible, would like to finance its growth without selling new equity. Selected information from the company's five-year financial forecast follows. a. According to this forecast, what dividends will the company be able to distribute annually without ralsing new equity and while maintaining a balance of $200 million In marketable securitles? What will the annual dividend payout ratlo be? (Hint: Remember sources of cash must equal uses at all times.) Note: Round dividends to the nearest million dollars and the payout ratlo % to the nearest ones place. Problem 6-11 This is a more difficult but Informative problem. James Brodrick & Sons, Incorporated, is growing rapidly and, if at all possible. would like to finance its growth without selling new equity. Selected Information from the company's five-year financial forecast follows. Year Earnings after tax ($ millions) Capital investment ($ millions) Target book value debt-to-equity ratio (%) Dividend payout ratio (%) Marketable securities ($ millions) (Year marketable securities = $200 million) 1 2 3 5 100 118 158 212 300 180 300 300 360 490 130 130 130 130 130 ? ? ? ? ? 200 200 200 200 200 a. According to this forecast, what dividends will the company be able to distribute annually without raising new equity and while maintaining a balance of $200 million in marketable securities? What will the annual dividend payout ratio be? (Hint: Remember sources of cash must equal uses at all times.) Note: Round dividends to the nearest million dollars and the payout ratio % to the nearest ones place. Year Dividends (millions) Divident Payout ratio (%) ($ millions) 2 3 22 5 86

Problem 6-11 This is a more difficult but Informative problem. James Brodrick & Sons, Incorporated, is growing rapidly and, if at all possible, would like to finance its growth without selling new equity. Selected information from the company's five-year financial forecast follows. a. According to this forecast, what dividends will the company be able to distribute annually without ralsing new equity and while maintaining a balance of $200 million In marketable securitles? What will the annual dividend payout ratlo be? (Hint: Remember sources of cash must equal uses at all times.) Note: Round dividends to the nearest million dollars and the payout ratlo % to the nearest ones place. Problem 6-11 This is a more difficult but Informative problem. James Brodrick & Sons, Incorporated, is growing rapidly and, if at all possible. would like to finance its growth without selling new equity. Selected Information from the company's five-year financial forecast follows. Year Earnings after tax ($ millions) Capital investment ($ millions) Target book value debt-to-equity ratio (%) Dividend payout ratio (%) Marketable securities ($ millions) (Year marketable securities = $200 million) 1 2 3 5 100 118 158 212 300 180 300 300 360 490 130 130 130 130 130 ? ? ? ? ? 200 200 200 200 200 a. According to this forecast, what dividends will the company be able to distribute annually without raising new equity and while maintaining a balance of $200 million in marketable securities? What will the annual dividend payout ratio be? (Hint: Remember sources of cash must equal uses at all times.) Note: Round dividends to the nearest million dollars and the payout ratio % to the nearest ones place. Year Dividends (millions) Divident Payout ratio (%) ($ millions) 2 3 22 5 86

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
8th Edition
ISBN:9781285065137
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
Problem 6DQ
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Problem 6-11 This is a more difficult but Informative problem. James Brodrick & Sons, Incorporated, is growing rapidly and, if at all possible, would like to finance its growth without selling new equity. Selected information from the company's five-year financial forecast follows. a. According to this forecast, what dividends will the company be able to distribute annually without ralsing new equity and while maintaining a balance of $200 million In marketable securitles? What will the annual dividend payout ratlo be? (Hint: Remember sources of cash must equal uses at all times.) Note: Round dividends to the nearest million dollars and the payout ratlo % to the nearest ones place. Problem 6-11 This is a more difficult but Informative problem. James Brodrick & Sons, Incorporated, is growing rapidly and, if at all possible. would like to finance its growth without selling new equity. Selected Information from the company's five-year financial forecast follows. Year Earnings after tax ($ millions) Capital investment ($ millions) Target book value debt-to-equity ratio (%) Dividend payout ratio (%) Marketable securities ($ millions) (Year marketable securities = $200 million) 1 2 3 5 100 118 158 212 300 180 300 300 360 490 130 130 130 130 130 ? ? ? ? ? 200 200 200 200 200 a. According to this forecast, what dividends will the company be able to distribute annually without raising new equity and while maintaining a balance of $200 million in marketable securities? What will the annual dividend payout ratio be? (Hint: Remember sources of cash must equal uses at all times.) Note: Round dividends to the nearest million dollars and the payout ratio % to the nearest ones place. Year Dividends (millions) Divident Payout ratio (%) ($ millions) 2 3 22 5 86
Transcribed Image Text:Problem 6-11 This is a more difficult but Informative problem. James Brodrick & Sons, Incorporated, is growing rapidly and, if at all possible, would like to finance its growth without selling new equity. Selected information from the company's five-year financial forecast follows. a. According to this forecast, what dividends will the company be able to distribute annually without ralsing new equity and while maintaining a balance of $200 million In marketable securitles? What will the annual dividend payout ratlo be? (Hint: Remember sources of cash must equal uses at all times.) Note: Round dividends to the nearest million dollars and the payout ratlo % to the nearest ones place. Problem 6-11 This is a more difficult but Informative problem. James Brodrick & Sons, Incorporated, is growing rapidly and, if at all possible. would like to finance its growth without selling new equity. Selected Information from the company's five-year financial forecast follows. Year Earnings after tax ($ millions) Capital investment ($ millions) Target book value debt-to-equity ratio (%) Dividend payout ratio (%) Marketable securities ($ millions) (Year marketable securities = $200 million) 1 2 3 5 100 118 158 212 300 180 300 300 360 490 130 130 130 130 130 ? ? ? ? ? 200 200 200 200 200 a. According to this forecast, what dividends will the company be able to distribute annually without raising new equity and while maintaining a balance of $200 million in marketable securities? What will the annual dividend payout ratio be? (Hint: Remember sources of cash must equal uses at all times.) Note: Round dividends to the nearest million dollars and the payout ratio % to the nearest ones place. Year Dividends (millions) Divident Payout ratio (%) ($ millions) 2 3 22 5 86
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