Dividend Policy

This week you will examine your company’s ability to move to theoptimal . Use the following questions to guide your research andanalysis.

Assignment Preparation

You will find helpful information in the following resource:

    • Principles of Corporate Finance Companion Web site (linked inthe Resources).

      Mechanics of Moving tothe Optimal

    • If your firm’s actual debt ratio is different from itsrecommended debt ratio, how should they get from the actual to the optimal? Inparticular,

      • Shouldthey do it gradually over time or should they do it right now?

      • Shouldthey alter their existing mix (by buying back stock or retiring debt) or shouldthey take new projects with debt or equity?

      • What typeof financing should this firm use? In particular,

        • Shouldit be short term or long term?

        • Whatcurrency should it be in?

        • Whatspecial features should the financing have?

          Dividend Policy

    • How has this company returned cash to its owners? Has it paiddividends, bought back stock or spun off assets?

    • Given this firm’s characteristics today, how would you recommendthat they return cash to stockholders (assuming that they have excess cash)?

      Submit your research and analysis to the assignment area whencomplete.

      Note: Your instructor may also use the Writing Feedback Tool toprovide feedback on your writing. In the tool, click the linked resources forhelpful writing information

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