Walsh Company is considering three independent projects, each of which requires a $4 million investment. The estimated internal rate of return (IRR) and cost of capital for these projects are presented here:$ $$ \begin{matrix} \text{Project H (high risk):} & \text{Cost of capital =16\\%} & \text{IRR=19\\%}\\ \text{Project M (medium risk):} & \text{Cost of capital =12\\%} & \text{IRR=13\\%}\\ \text{Project L(low risk):} & \text{Cost of capital =9\\%} & \text{IRR=8\\%}\\ \end{matrix} $$ $Note that the projects’ costs of capital vary because the projects have different levels of risk. The company’s optimal capital structure calls for 40% debt and 60% common equity, and it expects to have net income of$7,500,000. If Walsh establishes its dividends from the residual dividend model, what will be its payout ratio?

After a 5-for-l stock split, Tyler Company paid a dividend of $1.15 per new share, which represents a 7% increase over last year’s pre-split dividend. What was last year’s dividend per share?

Altamonte Telecommunications has a target capital structure that consists of 45% debt and 55% equity. The company anticipates that its capital budget for the upcoming year will be $1,000,000. If Altamonte reports net income of$1,200,000 and it follows a residual dividend payout policy, what will be its dividend payout ratio?

Gamma Industries has net income of $3,800,000, and it has 1,490,000 shares of common stock outstanding. The company’s stock currently trades at$67 a share. Gamma is considering a plan in which it will use available cash to repurchase 10% of its shares in the open market at the current $67 stock price. The repurchase is expected to have no effect on net income or the company’s P/E ratio. What will be its stock price following the stock repurchase?

Emergency Medical’s stock trades at $145 a share. The company is contemplating a 3-for-2 stock split. Assuming that the stock split will have no effect on the market value of its equity, what will be the company’s stock price following the stock split?

Walsh Company is considering three independent projects, each of which requires a 4 million dollars investment. The estimated internal rate of return (IRR) and cost of capital for these projects are presented here:

$$\begin{array}{lll} \text { Project } \mathrm{H} \text { (high risk): } & \text { Cost of capital }=16 \text{ percent} & \mathrm{IRR}=19\text{ percent} \\ \text { Project M (medium risk): } & \text { Cost of capital }=12 \text{ percent} & \text { IRR }=13 \text{ percent} \\ \text { Project L (low risk): } & \text { Cost of capital }=9 \text{ percent} & \text { IRR }=8 \text{ percent} \end{array}$$

Note that the projects' costs of capital vary because the projects have different levels of risk. The company's optimal capital structure calls for 40 percent debt and 60 percent common equity, and it expects to have net income of 7,500,000 dollars. If Walsh establishes its dividends from the residual dividend model, what will be its payout ratio?

Rubenstein Bros. Clothing is expecting to pay an annual dividend per share of $\$ 0.75$ out of annual earnings per share of $\$ 2.25$. Currently, Rubenstein Bros.' stock is selling for $\$ 12.50$ per share. Adhering to the company's target capital structure, the firm has $\$ 10$ million in total invested capital, of which $40 \%$ is funded by debt. Assume that the firm's book value of equity equals its market value. In past years, the firm has earned a return on equity (ROE) of $18 \%$, which is expected to continue this year and into the foreseeable future.

a. Based on this information, what long-run growth rate can the firm be expected to maintain? (Hint: $\mathrm{g}=$ Retention rate $\times$ ROE.)

b. What is the stock's required return?

c. If the firm changed its dividend policy and paid an annual dividend of $\$ 1.50$ per share, financial analysts would predict that the change in policy will have no effect on the firm's stock price or ROE. Therefore, what must be the firm's new expected long-run growth rate and required return?

d. Suppose instead that the firm has decided to proceed with its original plan of disbursing $\$ 0.75$ per share to shareholders, but the firm intends to do so in the form of a stock dividend rather than a cash dividend. The firm will allot new shares based on the current stock price of $\$ 12.50$. In other words, for every $\$ 12.50$ in dividends due to shareholders, a share of stock will be issued. How large will the stock dividend be relative to the firm's current market capitalization? (Hint: Remember that market capitalization $=\mathrm{P}_0 \times$ number of shares outstanding.)

e. If the plan in part above is implemented, how many new shares of stock will be issued, and by how much will the company's earnings per share be diluted?

Find the one-sided limit (if it exists). lim_(x→3^+) (x/3 + cot πx/2)

Name the phenomenon describing the impact facial expressions can have on our disposition, and give an example.

Situational Software Co. (SSC) is trying to establish its optimal capital structure. Its current capital structure consists of 25% debt and 75% equity; however, the CEO believes that the firm should use more debt. The risk-free rate, $\mathrm{r}_{\mathrm{RF}}$, is 4%; the market risk premium, RPM, is 5%; and the firm’s tax rate is 40%. Currently, SSC’s cost of equity is 12%, which is determined by the CAPM. What would be SSC’s estimated cost of equity if it changed its capital structure to 40% debt and 60% equity?

Indicate using a (+), (–), or (0) whether each of the following events would probably cause accounts receivable (A/R), sales, and profits to increase, decrease, or be affected in an indeterminate manner:

$$\begin{matrix} \text{ } & \text{A/R} & \text{Sales} & \text{Profits}\\ \text{The firm restricts its credit standards.}\\ \text{The terms of trade are changed from 2/10, net 30, to 3/10, net 30.}\\ \text{The terms are changed from 1/20, net 30, to 3/10, net 40.}\\ \text{The credit manager gets tough with past-due accounts.}\\ \end{matrix}$$

After a $5$-for-$1$ stock split, Strasburg Company paid a dividend of $\$ 0.75$ per new share, which represents a $9 \%$ increase over last year's pre-split dividend. What was last year's dividend per share?

What is the opportunity cost of investing in capital? Do you think a country can “overinvest” in capital? What is the opportunity cost of investing in human capital? Do you think a country can “overinvest” in human capital? Explain.