Case Solution & Analysis for Rockboro Machine Tools Corporation by Kenneth Eades.
Complete Case Study details are given below :
Case Name : Rockboro Machine Tools Corporation
Authors : Kenneth Eades
Source : Darden School of Business
Case ID : UV7227
Discipline : Finance
Case Length : 15 pages
Plagiarism : NO (100% Original work)
Description for case study is given below :
In mid-September 2015, Sara Larson, the chief financial officer of this large CAD/CAM (computer-aided design and manufacturing) equipment manufacturer must decide whether to pay out dividends to the firm’s shareholders, or repurchase stock. If Larson chooses to pay out dividends, she must also decide on the magnitude of the payout. A subsidiary question is whether the firm should embark on a campaign of corporate-image advertising and change its corporate name to reflect its new outlook. The case serves as an omnibus review of the many practical aspects of the dividend and share buyback decisions, including (1) signaling effects, (2) clientele effects, and (3) finance and investment implications of increasing dividend payout and share repurchase decisions. This case can follow a treatment of the Miller-Modigliani dividend-irrelevance theorem and serves to highlight practical considerations in setting dividend policy.
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