Assume that you were recently hired by a national consulting firm, which has been asked to help Adams, Stores, Inc. prepare for its public offering. Prepare a presentation in which you review the theory of dividend policy and discuss the following:
- A. The terms “irrelevance,” “bird-in-the-hand,” and “tax preference” have been used to describe three major theories regarding the way dividend payouts affect a firm’s value. Explain what these terms mean, and briefly describe each theory.
- B. What do the three theories indicate regarding the actions management should take with respect to dividend payout?
- C. What are stock repurchases? Discuss the advantages and disadvantages of a firm’s repurchasing its own shares.
- D. What are stock dividends and stock splits? What are the advantages and disadvantages of stock dividends and stock splits?
Specific Instructions: Powerpoint presentation, Minimum of 12 slides excluding names slide and references slide. Total of 14 slides are enough and it should be double spaced, one-inch margins, using a 12-point Times New Roman font. At least 4 references and in-text citations. No plagiarism.