Posted: March 23rd, 2017

What will the dividends per share and the external financing required  if the current dividend per share is maintained?

Required:

i. Explaining your findings, what is the NPV and IRR for each project at the time

the investment would be made?[10]

ii. Using each respective method which investments should be selected and justify

your conclusions.[10]

iii. Discuss how and why the above two methods conflict in their ranking of

investment projects and seek how such conflicts are resolved?[10]

iv. What will the dividends per share and the external financing required

 if the current dividend per share is maintained? [10]

 if the dividend per share payout ratio of 50% is maintained [10]

Justify your conclusions.

v. Briefly evaluate the various types of dividend policies that Thodes Incorporated

can adopt.[15]

vi. From your above response, if the dividend policy is considered a residual

decision, what will be the dividends per share and external financing requirement

in each year? Explain your answers. [15]

vii. Considering the above, under which policy will external financing is minimized?

Justify your conclusions. [5]

viii. Briefly discuss the factors that would influence Thodes’ dividend policy

formulation?[15]