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QUESTION Buena Terra Corporation is reviewing its capital budget for the upcoming year. It has paid a $3.00 dividend per share (DPS) for the past several years, and its shareholders expect the dividend to remain constant for the next several years. The company’s target capital structure is 60% equity and 40% debt, it has 1,000,000 shares of common equity outstanding, and its net income is$8 million. The company forecasts that it will require $10 million to fund all of its profitable (i.e., positive NPV) projects for the upcoming year. a. If Buena Terra follows the residual dividend model, how much retained earnings will it need to fund its capital budget? b. If Buena Terra follows the residual dividend model, what will be the company’s dividend per share and payout ratio for the upcoming year? c. If Buena Terra maintains its current$3.00 DPS for next year, how much retained earnings will be available for the firm’s capital budget? d. Can the company maintain its current capital structure, the $3.00 DPS, and a$10 million capital budget without having to raise new common stock? e. Suppose that Buena Terra’s management is firmly opposed to cutting the dividend; that is, it wants to maintain the $3.00 dividend for the next year. Also, assume that the company was committed to funding all profitable projects and was willing to issue more debt (along with the available retained earnings) to help finance the company’s capital budget. Assume that the resulting change in capital structure has a minimal effect on the company’s composite cost of capital so that the capital budget remains at$10 million. What portion of this year’s capital budget would have to be financed with debt? f. Suppose once again that Buena Terra’s management wants to maintain the $3.00 DPS. In addition, the company wants to maintain its target capital structure (60% equity and 40% debt) and its$10 million capital budget. What is the minimum dollar amount of new common stock that the company would have to issue to meet each of its objectives? g. Now consider the case where Buena Terra’s management wants to maintain the $3.00 DPS and its target capital structure, but it wants to avoid issuing new common stock. The company is willing to cut its capital budget to meet its other objectives. Assuming that the company’s projects are divisible, what will be the company’s capital budget for the next year? h. What actions can a firm that follows the residual dividend model take when its forecasted retained earnings are less than the retained earnings required to fund its capital budget? Verified answer
QUESTION A father is now planning a savings program to put his daughter through college. She is 13, plans to enroll at the university in 5 years, and should graduate 4 years later. Currently, the annual cost (for everything—food, clothing, tuition, books, transportation, and so forth) is $12,000, but these costs are expected to increase by 6% annually. The college requires total payment at the start of the year. She now has$10,000 in a college savings account that pays 9% annually. Her father will make six equal annual deposits into her account; the first deposit today and the sixth on the day she starts college. How large must each of the six payments be? (Hint: Calculate the cost (inflated at 6%) for each year of college and find the total present value of those costs, discounted at 9%, as of the day she enters college. Then find the compounded value of her initial $10,000 on that same day. The difference between the PV of costs and the amount that would be in the savings account must be made up by the father’s deposits, so find the six equal payments that will compound to the required amount.) Verified answer Other Quizlet setsRelated questionsScheduled maintenance: Saturday, September 10 from 11PM to 12AM PDT
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Terms in this set (41)by a large margin, most business messages are routine messages numerous routine messages are handled daily. therefore they need to be produced with efficiency the _______ planning process can be completed quickly for most routine messages AIM in a routine business message, how long should the primary message be? no more than 10 words what is the most important goal of a routine business message? to capture the reader's attention
which of the following are true a routine business messages? •readers are unlikely to resist them •they convey straightforward information •readers usually respond positively to them it should take about ______ to complete a routine business message 5 to 15 minutes when drafting a routine message, you should strive for a _______ tone • reader orientated • professional • helpful a routine message should be written which to fall of the following questions in mind? • how would my audience want to receive this information • how much detail does my audience expect all routine business messages should contain which of the following components? • a restatement of the key message • details • a primary message proofreading and request for feedback should take place during the ________ stage of routine message development. reviewing the private message in a routine communication should have _________ words. 10 or fewer which of the following might you use to highlight key ideas when drafting a routine message? • external links • numbering • bullets which of the following take place during the reviewing stage of a routine message? • proofreading the message • rereading the message • getting feedback for a group message in a routine business correspondence, the primary message should appear in the first sentence or two the ______ of a routine request should be clear and specific subject lines when employees explain the reasons and the text of routine requests, the company is better able to maintain _______ by keeping written records that show why decisions were made transparency when drafting a routine message, you should strive for _______ tone • helpful • reader-oriented • professional establish clear expectations, especially when you're using the supervisor or manager, directly • improves your credibility •cultivates interpersonal trust messages that include directions usually offer guidelines for specific tasks the response to a routine business request, the readers likely to express little or no ________ to what the message is saying resistance when you justify a routine request, you should provide the rational for the request in your message how much time do most readers expect it will take to grasp the main point of a routine business message? less than 10 to 15 seconds when responding to inquiries, which of the following are the three best ways to set off separate questions • bullets • numbered list • special formatting managers and supervisors need to ________, even if they're afraid of going beyond their authority communicate clear expectations routine messages that include directions are much like those that set expectations which of the following would be considered a business announcement? • a notice that the office Christmas party will be held in the conference room • a statement that the company is changing its dress code • it must email informing customers that the company is moving to a new location your response to inquiries will be more effective if you ______ so that readers can easily identify your answers Mark each question with a bullet or number a company rights to one of its suppliers, requesting an adjustment to the invoice for a received shipment because of the merchandise was missing period this type of business message is known as ________. a claim an announcement is what type of communication? one-to-many the most efficient thank you notes are • sincere •written by hand • sent promptly which component should be included in an effective message of appreciation? • an expression of thanks •a brief rational • a statement of Goodwill to be an effective routine message, a claim should do which of the following • explain why the claim is being made • make a call to action •specify what the claim is an appreciation message should be which of the following • personal • simple • genuine after harming someone at work, weather intentionally or not, business professionals with high &________ will quickly try to make amends emotional intelligence sending thank you notes can accomplished which of the following? • maintain strong working environment • boost repeat business apologies become ineffective when they are • cliche • vague • insincere when a professional contact encounters a personal loss, it is _______ to extend sincere sympathies appropriate when delivering an appreciation message, and exaggeration display of gratitude May • the insincere • appear unprofessional factors that lead to personal offenses include • personality clashes ... ... Sets with similar termsMGT 789187 terms notemilyg Business Communication Quiz 279 terms jesus1805 MADM 210 | Ch. 545 terms ArianaJBoyd Chapter 779 terms kwf2593 Sets found in the same folderBCOM 3950 Chapter 15 Presentation Exercises7 terms HuaiLi_Jiang BCOM60 terms Diana_Elizarraraz1 BCOM chapter 781 terms Diana_Elizarraraz1 BCOM chapter 855 terms Diana_Elizarraraz1 Other sets by this creatorComm 2200 week 423 terms Haley_Bunner_2020 Quiz #110 terms Haley_Bunner_2020 Verified questionsQUESTION Farley Inc. has perpetual preferred stock outstanding that sells for $30 a share and pays a dividend of$2.75 at the end of each year. What is the required rate of return? Verified answer
QUESTION Find the following values. Compounding/discounting occurs annually. a. An initial $200 compounded for 10 years at 4%. b. An initial$200 compounded for 10 years at 8%.c. The present value of $200 due in 10 years at 4%. d. The present value of$1,870 due in 10 years at 8% and at 4%. e. Define present value and illustrate it using a time line with data from part d. How are present values affected by interest rates? Verified answer
QUESTION Byron Books Inc. recently reported $13 million of net income. Its EBIT was$20.8 million, and its tax rate was 35%. What was its interest expense? (Hint: Write out the headings for an income statement, and fill in the known values. Then divide $13 million of net income by (1-T)=0.65 to find the pretax income. The difference between EBIT and taxable income must be interest expense. Use this same procedure to complete similar problems.) Verified answer QUESTION A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: $$ \begin{matrix} \text{ } & \text{0} & \text{1} & \text{2} & \text{3} & \text{4}\\ \text{Project S} & \text{- \$ 1.000} & \text{\$ 870} & \text{\$ 250} & \text{\$ 25} & \text{\$ 25}\\ \text{Project L} & \text{- \$1.000} & \text{\$ 0} & \text{\$ 250} & \text{\$ 400} & \text{\$ 845}\\ \end{matrix} $$ The company’s WACC is 8.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Verified answer Other Quizlet setsŠtátny rozpočet - skladba48 terms Leni_bru BOR Chapter 2-Tuesday21 terms Brownies1700 cardiology92 terms Bansari1827 401 - 500 Terry Reynolds Echo98 terms improvmomma Related questionsQUESTION What grade must you earn at another school for the grade to be accepted by Clemson University? 15 answers QUESTION (T/F) Transferring competencies across industries involves taking a distinctive competency developed in one industry and implanting it in an existing business unit in another industry. 3 answers QUESTION Explain Current workforce trends in business. 13 answers QUESTION Chapter 9: Production and Operations Management 11 answers What is routine business messages?Remember that routine messages in business communication serve to document the “who, what, where, why, and how” of daily operations. Most routine messages consist of templates that can be customized with pertinent details about a customer, an issue or the item requiring communication.
Which of the following take place during the reviewing stage of a routine message quizlet?Which of the following take place during the reviewing stage of a routine message? the rationale for the request in your message. Managers and supervisors need to ______, even if they are afraid of going beyond their authority.
What is a routine message?Routine messages include emails, memos, and letters that give information or make requests. For routine messages, you should use plain language and a direct approach.
Which statement is most true of a routine request?Which statement is most true of a routine request? Your tone should be direct but not bossy or domineering. retain the goodwill of the recipient.
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Which of the following are true of routine business messages
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