《财务管理》课程PPT教学课件（英文版）Chapter 17 Dividend Policy andlnternal Fimancing

h们 Dividend p|l andIntermal fiancing LIS)1 o 2002. Prentice Hall. nc

© 2002, Prentice Hall, Inc

Stock returns Return Pi-Po + Di Po

Stock Returns: P1 - Po + D1 Po Return =

Stock returns Return Pi-Po + Di Po P1-0 DI Po Po

P1 - Po + D1 Po P1 - Po D1 Po Po + Return = = Stock Returns:

Stock returns Return Pi-Po + Di Po PI-Po Di Po Po Capital gain

Return = Capital Gain P1 - Po + D1 Po P1 - Po D1 Po Po = + Stock Returns:

Stock returns Return Pi-Po + Di Po P1- po+ DI Po Po Capital Gain Dividend Yield

Return = Capital Gain Dividend Yield = + Stock Returns: P1 - Po + D1 Po P1 - Po D1 Po Po

Dilemma: Should the firm use retained earnings for a) Financing profitable capital investments? b)paying dividends to stockholders?

Dilemma: Should the firm use retained earnings for: a) Financing profitable capital investments? b) Paying dividends to stockholders?

P1 DI Return Po If we retain earnings for profitable investments

• If we retain earnings for profitable investments, P1 - Po D1 Po Po Return = +

P1 DI Return Po If we retain earnings for profitable investments, dividend yield will be zero

• If we retain earnings for profitable investments, dividend yield will be zero, P1 - Po D1 Po Po Return = +

P1 DI Return Po If we retain earnings for profitable investments, dividend yield will be zero, but the stock price will increase, resulting in a higher capital gain

• If we retain earnings for profitable investments, dividend yield will be zero, but the stock price will increase, resulting in a higher capital gain. P1 - Po D1 Po Po Return = +

P1 DI Return Po If we pay dividends

• If we pay dividends, P1 - Po D1 Po Po Return = +