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CHAPTER 17
ELECTRONIC TIMING, INC.
1. The value of the company will decline by the amount of the dividend. Ignoring taxes, shareholders’
2. The value of the company could increase or decrease. If the company is over-levered, paying off
3. The PE ratio will fall and the ROA and ROE will increase, but the changes are irrelevant to the
4. A regular dividend payment is something the company should probably not undertake, assuming it
5. The implication is that the company should not retain earnings unless the ROE of the new project is
6. The decision does depend on the organizational form of the company. Money paid to shareholders of
