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- Would you expect a company in a rapidly growing technological industry to have a high or low dividend payout ratio?Would you prefer to invest in a company that has a regular dividend policy or a company that has a low regular and extra dividend policy? Please explainDiscuss and explain why the following are considered as factors affecting dividend policy? Give some examples as well.1. Number of profitable investment opportunities.2. Possibility of accelerating or delaying projects.
- Outline the main features of the Stable Dividend Growth policy and explain the type of company this policy is likely to be unsuitable for.What is the principal problem involved in using a dividend valuation model to value companies whose operations are closely correlated with economic cycles.Explain ‘dividend re-investment plan’, and how it benefits the company.
- Explain the Modigliani-Miller Payout Policy Irrelevance Proposition. What are the implications of Lintner’s model for firms’ dividend payout behaviour?Which reason(s) below would be a good justification to use a multistage dividend discount model? (Select all that apply) The company does not pay a dividend The company is rapidly growing The company has a growth rate that is expected to remain stable over the known future The company has a growth rate that is slowing down incrementallyWhat are the real-world factors that would encourage firms to follow a high dividend policy.
- In what circumstances would you choose to use a dividend discount model rather than a free cash flow model to value a firm?Explain the principal problem involved in using a dividend valuation model to value: i. companies whose operations are closely correlated with economic cycles. ii. companies that are of very large and mature. iii. companies that are quite small and are growing rapidly. Assume that all companies pay dividends.Can you identify a possible explanation for the company’s declining profits? If so, what is it?