Reading 27- Dividends and share Repurchases

CFA Level II
#1

In calculating residual dividend policy, we should consider the followings;

Amount of new project for example 15. Company debt/equity = 15/85. company earning= 25

15 * .85= 12.75.

Residual dividends= 25-12.75= 12.25

In the link below U can find two qestions.

  1. From CFAI-EOCQ
  2. From Elanguides PQ’s

Elanguides used the sam method as mentioned above.

CFAI used the following methods- for example;

Residual dividends= 21-15=10

What is the reason you can review the question in the link below.

I think because the question stated that "the amount will be funded enterily by thus year earning? Is it right? Or there is another reason?

Thanks

#2

You are right about your understanding - “entirely” is the key word - rather than at target cap structure

#3

Thanks.

I’m sure that I posted the links for Q’s. any way;

[Removed by admin]

#4

They will be taken down again by the admins. That’s copyright infringement, mate.