We spent this session setting up the trade off on dividends, looking at two bad reasons for paying dividends (that they are more certain, that you had a good year) and three potentially good reasons (to signal to market, to make your clientele happy and to take advantage of debt holders). In the final part of the session, we looked at both how much cash a company would afford to return to shareholders (by computing a FCFE) and comparing that to actual cash returned (in dividends and buybacks), but looked at how trust in management and excess debt capacity can alter your final judgment on whether a company should return more or less cash to shareholders.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr19/session22slides.pdf
Post Class Test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session22test.pdf
Post Class Test Solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session22soln.pdf


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