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FIN 571 Corporate Finance Week 1 - Long-Term Financing

A solved assignment on corporate finance and long-term financing strategies.

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FIN 571 Corporate FinanceWeek 1-Long-Term FinancingThis course applies corporate finance concepts to make management decisions. Students learnmethods to evaluate financial alternatives and create financial plans. Other topics include cashflows, business valuation, working capital, capital budgets, and long-term financing. Thisgraduate-level courseis 6 weeks.Week 1-Long-Term FinancingQ1-Evaluate the effect of dividend policy on stock price.Answer–Dividend is that part of net profit which is paid in cash by the company to itsshareholders after exclusion of the retained profit. Dividend may also be defined as divisibleprofits which are distributed amongst the members of a company in proportion to their shares ina manner as is prescribed by law. Dividend policy can be defined as the plan of action adoptedby the company’s board of directors whenever the dividend decision is to be made. Dividendpolicy determines what percentage of earnings the company shouldbe paidout to shareholdersand what portion will be retained in the business to finance long-term growth.The main objective of financial management is to maximize the wealth of the shareholders.Therefore, while taking dividend decision, the management should keep in view the effect of thisdecision on the wealth of the shareholders. If the payment of dividend is helpful in achieving thisobjectives, it should be paid otherwise the profits should be retained in the business for financinginvestment programmes. Thus, dividend decision is based on the fact that how far it is effectivein increasing the wealth ofthe shareholders i.e. value of the firm or shares. Financial expert havenot been unanimous on this issue. Still various models have been involved to evaluate the

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Document Details

University
University of Phoenix
Course
FIN 571
Subject
Finance

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