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FINS2615-Intermediate Business Finance - T2 2025
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The Modigliani-Miller dividend irrelevance
proposition states that in perfect capital markets, holding ________ policy fixed, the firm’s choice of
dividend policy is irrelevant and does not affect the initial share price.
Share repurchases have a tax advantage over dividends in Australia because
The system under which Australian companies pass
on to their shareholders credit for corporate
income taxes paid is called a
Orchid Biotech Corporation is evaluating several development projects for experimental drugs. Although the cash flows are difficult to forecast, the company has come up with the following estimates of the initial capital requirements and NPVs for the projects. Given a wide variety of staffing needs, the company has also estimated the number of research scientists required for each development project. (All cost values are given in millions of dollars.)
Project number
|
Initial capital ($)
|
Number of scientists
|
NPV ($)
|
I
|
10
|
2
|
10.1
|
II
|
15
|
3
|
19.0
|
III
|
15
|
4
|
22.0
|
IV
|
20
|
3
|
25.0
|
V
|
30
|
10
|
60.2
|
a. Suppose that Orchid has a total capital budget of $60 million. Which projects should Orchid choose?
A firm has $300 million of assets that includes $50 million of cash and 10 million shares outstanding. If the firm uses $30 million of its cash to repurchase shares, what is the new price per share?
Suppose a firm does not pay a dividend but repurchases shares using $20 million of cash. The market value of the firm decreases by
Anyone who purchases the stock on or after the ________ date will not receive the dividend.
A firm may announce its intention to buy its own shares in the open market like any other investor, also known as a/an