Economics Homework Help

I need to answer the following case regarding the rockboro case for Case studies of finance.

Case Study 26: Rockboro Machine Tools Corporation

Use the quantitative analysis tools learned in class to study the case thoroughly. Be thorough, show your calculations, make recommendations, and use at least 3 references (one reference can be the textbook) with APA style format. Write at least (three) 3 pages not including cover and reference page answering the following questions:

1) Setting policy within a financing constraint – Can the company afford it? Explain why or why not. Review the financial data. (Hint: will the company have to reduce its investment in R&D?)

2) Does Miller–Modigliani dividend-irrelevance theorem apply to Rockboro’s case? Explain why or why not.

3) Explain the theory of Efficient and Inefficient Market related to this case.

4) Explain how Rockboro’s chosen dividend strategy relative to Signaling Theory. Signaling the directors’ outlook- What will investors think of the new dividend policy? What message will they be sending to potential investors with each of the following dividend policy options:

a) Residual Payout Policy

b) Low Payout Policy

c) Zero Payout Policy

5) In the theory of clientele effect, what types of investors will Rockboro attract with each type of policy options from question 4 above? Generally, positioning the firm’s shares in the equity market – How will each chosen policy impact the reputation and image of the firm?

6) Which dividend payout policy should they choose?