An Engineer with a Major Power Company Decides to Leave

question 53

Essay

An engineer with a major power company decides to leave his job because he believes he has found a way to deliver Internet service across the electrical grid and he wants to start up his own business. He doesn't have very much cash or collateral. Which method of financing do you believe he will most likely use and why?

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Definitions:

Market Price

The current trade value at which a service or asset can be exchanged.

Shares Outstanding

The complete count of a corporation's shares currently in possession of all shareholders, including those owned by institutional investors and the restricted shares held by the company's executives and insiders.

Cyclical Dividend Policy

A dividend payment strategy where dividends fluctuate in line with the company's earnings, which often coincide with economic cycles.

Retention Ratio

The percentage of net income that is retained by a company rather than distributed to its shareholders as dividends.