The CEO of your firm is eeking advice concerning the capital structure for a proposed new project. Advise the CEO as to the factors that should be considered in deciding what capital structure to adopt for the project. (20 marks)
1. a. Identify one advantage and one disadvantage to maintaining a constant dollar dividend over many years. (2 marks)
b. Explain the issues involved in setting dividend policy.
c. How would a stock dividend distribution be recorded by the issuing firm? Explain whether shareholders are likely to view a stock dividend as a good subsitute for a cash dividend. (6 marks)
2. Managers seeking to evaluate projects have a number of capital budgeting techniques available to them. Describe and evaluate some company used capital budgeting methods and advise your CEO as to what method(s) he should adopt for his firm. (20 marks)