Finc2012 Essay

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FINC 2012 Corporate Finance II Major Group Assignment SHIJUN HU 310013127 YIGE WU 430189438 YUPING HUANG 430415164 Synopsis The paper examines the factors that affect managers’ decisions on delivering return to investors. Each of the corresponding questions would be addressed according to their source: internal or external. More specifically, four major perspectives would be analyzed: Payout Policy, Debt and Risk, Pecking Order Theory and Tax effects. After application of the theoretical factors onto the real world, the poor performed companies are still recommend to stick to their payout policy unless further specific analysis is carrying forward. Introduction Investors make their financial decisions, based on the expected return and risk, choosing among a variety of investments. Managers of the corporation, on the other hand as the beneficiary of the investment, have to determine the appropriate method and the amount of the return they give to investors. A lot of factors would be fully considered during the complex process. The purpose of the report is to address two issues: What are the factors that affect the amount to be paid to investors? What are the factors that affect the ways to deliver return? Further, a company with a strong financial position, TPG Telecom Limited and a relatively financial distressing company, Reverse Corp Limited, are applied to illustrate the question as the supplementary real world cases. The comparison between two companies would specifically fall into the way how they deliver dividends. The report then provides managers with recommendations of whether they should and how they could have executed the policy differently. Overview In contrast to its moderately growing market volumes, the market value of Australian telecommunication service has been instead continuously suffering a shrink over the past

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