JLChem Corporation, a chemical manufacturing firm with changing investment opportunities
June 8th, 2024
11. JLChem Corporation, a chemical manufacturing firm with changing investment opportunities, is considering a major change in dividend policy. It currently has 50 million shares outstanding and pays an annual dividend of $2 per share. The firm current and projected income statement are provided below (in millions):CurrentProjected for Next YearEBITDA$1,200$1,350– Depreciation$200$250EBIT$1,000$1,100– Interest expense$200$200EBT$800$900– Taxes$320$360Net income$480$540The firm’s current capital expenditure is $500 million. It is considering five projects for the next year:ProjectInvestmentBetaIRR (Using Cash Flows to Equity)A$190 mil0.612.0%B$200 mil0.812.0%C$200 mil1.014.5%D$200 mil1.215.0%E$100 mil1.520.0%