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Based on the company dividend policy opportunities offered by Sara Larson, CFO of

Rockboro Machine Tools Corporation, a Zero-Dividend payout is most justified. As a Zero-

dividend payout may not be as lucrative to prospective and existing investors, a Zero payout will

improve spending on cash towards advancing the company’s technology and a future in

CAD/CDM. Improving the company’s technology will be a significant positive factor for the

company in the future as there will be an improvement in the number of orders placed and sales

coming. Through this method, over a certain number of years, Rockboro Machine Tools

Corporation will have less excessive debt and the possibility of given a dividend payout to

investors with a more positive future outlook. The negative outlook is that capital investors may

be hesitant to keep their investments in the corporation.

Based on a 40% company dividend policy, the amount of debt will increase due to an

increase in dividends, but dividend capital investors will be pleased with the corporation.

Through this policy, the proponents have their basis on a positive increase in orders and sales

and the prospect for more capital investors to invest in the corporation as the company will be on

par with the 40% average electronical-industrial-equipment industry. As justified by Exhibit 26.2

and Exhibit 26.8, the 40% Target Dividend Payout will increase the amount of liabilities

projected 3 years (Exhibit 26.2) and 7 years (Exhibit 26.8) and there will be no money to

improve resources and the company’s prospects for future development.

A 50% company dividend policy is unjustified, on behalf of Rockboro Machine Tools

Corporation, at its present state. Giving a 50% dividend policy, based on the company’s present

state, there will be complete liabilities for the company and the company will essentially become

need to have stock buybacks. Without a significant input of profit from advanced technology or

other departments of the company with significant profits, this policy cannot be implemented.