The writer is very fast, professional and responded to the review request fast also. Thank you.
Presentation/PPT
27/08/2022
Complete the following problems based on the Megaware case study below. Where appropriate, show or explain your work. You may use Excel to work on the problems.
Megaware Case Study
Megaware Incorporated is a technology firm that was founded eight years ago by John Thompson and Jill Dillman. Megaware manufactures various hardware and software components. Its products are used in personal computers and other peripheral devices. In addition to John and Jill, Nick Jones is also an owner of the firm because he provided capital. Each of the three owns 20 percent of the company. The current employees own the remaining part of the company.
The firm recently developed a new computer hardware component. The component is supposed to be more energy efficient and less costly to produce. After investigating the possibility of manufacturing the new hardware component, Megaware determined that constructing a new plant would be too costly. John, Jill, and Nick do not want to bring in another outside investor, so Megaware has decided to sell the hardware component for an after-tax payment of $42 million.
Case Study Problems
Problem 1. John thinks that the firm should use the excess cash flow to pay a special one-time dividend to the investors. How will implementing this proposal affect the value of the company as well as the stock price?
Problem 2. Jill believes that the firm should use the excess cash flow to pay off debt and expand its manufacturing capability. How would implementing this proposal affect the company?
Problem 3. Nick contends that a share repurchase will increase the company’s ROA, ROE, and P/E ratio. Do you agree? How will a share repurchase affect the value of the firm?
Problem 4. John, Jill, and Nick have discussed a proposal to commence a regular dividend payment to stockholders. Evaluate this plan.
Problem 5. The dividend growth model is used by many investors to value stock. Calculate the price of a share of Megaware stock today by using the following dividend growth model equation:
P0 = E1(1 − b) / Rs = ROE × b
The value of the stock equals next year’s dividends divided by the sustainable growth rate.
Based on your results, should Megaware pay a dividend or expand its manufacturing capability? Explain your decision.
Problem 6. Does the way a company is organized (as a corporation, LLC, or another structure) determine whether the company should pay a dividend?
The writer is very fast, professional and responded to the review request fast also. Thank you.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more