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Wordcount: 1075
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capital structure and dividend payout policy of MHI
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Michael Hill Jeweller is a New Zealand based fast growth international company with high brand equity. Although the company is currently concentrating on the international expansion, the financing and dividend decisions are still vital in providing a supportive operating environment as well as maximizing the company’s value.
Theoretically, the VL is equal to the VU plus the PV of tax benefit (adjust for the volatility of income) and takes away the cost of leveraging. In NZ, however, the imputation tax system (fully imputed) is adopted, which means that there is no tax benefit for leveraging, everyone just end up paying his or her own personal tax. In determine the cost of equity, the company should first consider the risks, Michael Hill
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