PRIN.OF CORPORATE FINANCE
PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 16, Problem 23PS

Dividend clienteles Mr. Milquetoast admires Warren Buffett and believes that Berkshire Hathaway is a good investment. He wants to invest $100,000 in Berkshire Hathaway B shares but hesitates because Berkshire Hathaway has never paid a dividend. He needs to generate $5,000 per year in cash for living expenses. What should Mr. Milquetoast do?

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3.Mr. Wise Sapi invested 50M in the common shares of Profitable Ventures, Inc. What if the guaranteed return for this investment is 5M and prior to the issuance of dividends, the management decided to retain all earnings. What will make Mr. Sapi happy? (the tenor must be in the context of investment)  A. If his increased capitalization will allow him to extract returns higher than the prevailing market rate B. If his increased capitalization will allow him to extract returns equal to the prevailing market rate C. If his increased capitalization will allow him to extract returns lower than the prevailing market rate D. If he will receive 5M as dividends
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Dividend explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=Wy7R-Gqfb6c;License: Standard Youtube License