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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
You are analyzing the dividend policy of Conrail, a major railroad, and you have collected the following information from the last 5 years –

The average debt ratio during this period was 40% and the total non-cash working capital at the end of 1990 was $ 10 million.
a. Estimate how much Conrail could have paid in dividends during this period.
b. If the average return on equity during the period was 13.5%, and Conrail had a beta of 1.25, what conclusions would you draw about Conrail’s dividend policy? (The average T.Bond rate during the period was 7%, and the average return on the market was 12.5% during the period)
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