depreciation of$24 million in 1995. and its working capital was $500 million (on revenues of$5 billion). The rm has a debt ratio of 10 percent and plans to maintain this debt ratio. a. Estimate how much Manpower will have available to pay out as dividends next year. b. The current cash balance is $143 million. If Manpower is expected to pay $12 million in dividends next year and repurchase no stock, estimate the expected cash balance at the end of the next year. 23. How would your answers to the previous problem change ifMaupower in plans to pay off its outstanding debt of $100 million next year and become a debt-free company? 24. You are an institutional investor and have the collected the following information on ve maritime rms to assess their dividend policies. i Company FCFE Dividends Paid ROE 3m 1 Alexander & Brown $55 $35 8% 0.80 ; American President $60 $12 14.5% 1.30 1 0M! $15 $5 4.0% 1.25 1 Overseas Shipholding $20 $12 1.5 97: 0.90 1 Sea Containers $5 $8 14% 1 .05 The average risk-free rate during the period was 7 percent. and the average return on the market was 12 percent. a. Assess which of these firms you would pressure to pay more in dividends. b. Which of the rms would you encourage to pay less in dividends? c. How would you modify this analysis to reect your expectations about the future of the entire sector? 25. You are analyzing the dividend policy of Black and Decker, a manufacturer of tools and appliances. The following table summarizes the dividend payout ratios, yields. and expected growth rates of other films in the waste disposal business. Company Payoutalt'o Dividend Yield Ex.Growrh lungs..." | :1 av. 1 1 my. I 1 m. a. Compare Black and Becker's dividend policy to those of its peers, using the average dividend payout ratios and yields. 1). Do the same comparison, controlling for differences in expected growth. 26. The following regression was run using all NYSE firms in 1995 YIELD = 0.0478 0.0157 BETA 4- 0.0000008 MKTCAP + 0.00679? DB'IRATIO + 0.0002 ROE 0.09 NCEXII'A R2 =12.88% where BETA = beta of the stock. MKTCAP = market value of equity + book value of debt. DBTRATIO = book value of dethKTCAP, ROE = return on equity in 1994. and NCEXITA = (capital expenditures depreciationtotal assets. The corresponding values for Black and Decker. in 1995, were as follows: Beta = 1.30 MKTCAP = $5,500 million DBTRATIO = 35% ROE = 145% NCEXJ'I'A = 4.00% Black and Decker had a dividend yield of 1.3 percent and a dividend payout ratio of 24 percent in 1995. a. Estimate the dividend yield for Black and Decker, based on the regression. b. Why might your answer be different using this approach than the answer to the prior question. where you used only the comparable firms? 27. Handy and Harman, a leading fabricator of precious metal alloys. pays out only 23 percent of its earnings as dividends. The average dividend payout ratio for metal fabricating rms is 45 percent. The average growth rate in earnings for the entire sector is m _______ nr__r._ ___1 n_____ : ________ .1 r. _____ no _______ \\ on-..\" ll___l.. __