Tabula inc operates in a mature industry as a ldquocash


Tabula, Inc. operates in a mature industry as a “cash cow” and thus pays out all of its earnings as dividends. But it has recently developed a new technology that could provide good growth potential, allowing the firm to earn an 8% return on retained earnings in future years. The new technology, however, will require investment. To obtain investment cash, Tabula is considering reducing its dividend payout ratio immediately from 100% to 40%. Current (t=0) earnings and dividends are $285,000. Investors are expecting a return of 10% overall return. In light of this, what is Tabula’s NPVGO?

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Financial Management: Tabula inc operates in a mature industry as a ldquocash
Reference No:- TGS01568688

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