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# Accounting for Corporations

### Determining the amount of a preferred dividend.

Colliers, Inc. has 200,000 shares of cumulative preferred stock outstanding. The preferred stock pays dividends in the amount of \$2 per share, but because of cash flow problems, the company did no pay any dividends last year. The board of directors plans to pay dividends in the amount of \$1million this year. What amount will

### Number of shares that can be issued.

The balance sheet for Crutcher Corp. reported 147,000 shares outstanding, 200,000 shares authorized, and 10,000 shares in treasury stock. Compute the maximum number of shares that Crutcher could issue.

### Briefly discuss the three important dates for a dividend.

Briefly discuss the three important dates for a dividends.

### STOCK DIVIDENDS

The owners' equity accounts for a company are shown here: Common stock (\$1 par value) \$ 10,000 Capital surplus 194,000 Retained earnings 633,000 ====== Total owners' equity \$837,000

### Growth Rate of Dividends (Constant Rate)

Grant Corporation's stock is selling for \$40 in the market. The company's beta is 0.8, the market risk premium is 6 percent, and the risk-free rate is 9 percent. The previous dividend was \$2 (i.e., D0 = \$2) and dividends are expected to grow at a constant rate. What is the growth rate for this stock?

### Dividend value

29. Cellular Systems paid a \$3 dividend last year. The dividend is expected to grow at a constant rate of 5 percent over the next two years. The required rate of return is 12 percent (this will also serve as the discount rate in this problem). Round all values to three places to the right of the decimal point where appropriate.

### Using the residual dividend model, amount of dividends

The following data applies to my company: Net Income \$ 300,000,000 Total Capital Budget \$ 100,000,000 Debt/Asset Ratio WACC 0% 14.0% 10% 13.7% 20% 13.4%

### Cost of equity using historical dividend data

I need help with a problem that I have the solution to but need to know how it's done so I can study for a test: Annual dividends for Adams Mills are as follows: year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 div. .00 .10 .10 .10 .10 .10 .10 .12 .15

### Calculate Preferred stock rate of return given price and dividend

XYZ Corp has preferred stock outstanding that pays an annual dividend of \$12. It has a price of \$110. What is the required rate of return (yield) on the preferred stock?

### Stocks and Returns

Karlo Corporation is considering an initial public offering. Other firms in the same mature industry as Karlo (each of whom has traded publicly for at least five years) include the following. Each of these firms (including Karlo) has negligible levels of debt. Also listed is the Standard & Poors 500, an index of large US stocks.

### Perpetual Dividend Growth; multiple growth rates

1-Perpetual Dividend Growth - A company just paid a divided of \$3.00. If the dividends will grow at 5.5% per year and you require a return of 11.8 %, what is the most you should be willing to pay for the stock? 2- Perpetual Dividend Growth - Star Light & Power increases its dividend 5% per year every year. This utility is val

### Cellular Systems - Dividend Discount

Cellular Systems paid a \$3 dividend last year. The dividend is expected to grow at a constant rate of 5 percent over the next two years. The required rate of return is 12 percent (this will also serve as the discount rate in this problem). Round all values to three places to the right of the decimal point where appropriate.

### Financial management

A stock currently sells for \$28 a share. Its dividend is growing at a constant rate, and its dividend yield is 5 percent. The required rate of return on the company's stock is expected to remain constant at 13 percent. What is the expected stock price, seven years from now? \$24.62 \$29.99 \$39.40 \$41.83 \$47.98

### Growth of stock

100. A company stock has a current market value of 40.50. The co. just paid a dividend = to 1.50 per share, which is expected to grow at a constant rate forever into the future. If the co. marginal investors require a rte of return = to 12%, what is the rate at which dividends are expected grow in the future. 8.3% 12.0 4,

### Stock Market Price and Dividend Growth

99. A company paid a dividend of 1.30 yesterday. The next dividend will be in one year and is expected to be 1.50. After that, dividends are expected to grow at a constant 15% foreever. The discount rate for the co. is 25%. What should be the market price 17.25 15.00 13.20 13.80 18.75

### Current Price

45. A share of stock has a dividend of Do = \$5. The dividend is expected to grow at a 20% annual rate for the next 10 years, then at a 15% rate for 10 more years, and then at a long-run normal growth rate of 10% forever. If investors require a 10% percent return on this stock, what is its current price? 100.00 82.35 195

### Present value

A company plans to retain and reinvest all of the earnings for the next 30 years. Starting in year 31, the company will begin to pay a \$12.00 per share dividend. The dividend will not subsequently change. Given a required return of 15%, what should the stock sell for today?

### Corporate Dividend Policies

Here are several assertions about typical corporate dividend policis. Which of them are true? Write out a corrected version of any false statements. a. Most companies set a target dividend payout ratio. b. They set each year's dividend equal to the target payout ratio times that year's earmings. c. Managers and investo

### Stock Values

Integrated Potato Chips paid a \$1 per share dividend yesterday. You expect the dividend to grow steadily at a rate of 4 percent per year. a. What is the expected dividend in each of the next 3 years? b. If the discount rate for the stock is 12 percent, at what price will the stock sell? c. What is the expected stock price 3

### Pisa Construction: Evaluation of new issue of shares

Could someone please help me evaluate this argument with particular attention to the assumptions implicit in the numerical example? Here is recent financial data on Pisa Construction, Inc. Stock price \$40 Market value of firm \$400,000 Number of shares 10,000 Earnings

### Brooks Enterprises has never paid a dividend.

Brooks Enterprises has never paid a dividend. Free cash flow is projected to be \$80,000 and \$100,000 for the next w years, respectively, and after the second year it is expected to grow at a constant rate of 8 percent. The company's weighted average cost of capital is WACC = 12%. a. What is the terminal, or horizon, value of

### Balance Sheet Items with Sales,Profit Margin and Dividend Policy

On the basis of historical relationships between its balance sheet items and its sales, profit margin, and dividend policy, Thode Corporation's analysts have graphed the relationship of additional funds needed (on the Y-axis). If Thode decides to increase the percentage of earnings paid out as dividends, which of the following c

### Value of common shares

A common share paid a dividend of \$1.00 per share five years ago. The dividend paid yesterday was \$1.22. If dividend growth continues at its historical rate, what will be the value of the common shares six years from today? Investors require a return of 10% on investments of this level of risk.

### Dividend Reinvestment Plans

What advantages to the corporation and the stockholder do dividend reinvestment plans offer?

### Redeeming stock shares upon retirement

Need help Mr. Burton owns 58,000 of the 100,000 outstanding shares of Mirkwood stock with a \$50 basis per share. He wants to retire from business, and Mirkwood?s board of directors has offered to redeem any number of his shares for FMV (\$120 per share). Mr. Burton wants to surrender enough shares so that the redemption will

### Ex-Dividend Share Price

A portfolio has 200 shares of a company's stock. The stock currently sells for \$105.00 per share. The company has announced a dividend of \$1.50 per share with an ex-dividend date of April 19th. Assuming no taxes, how much will your stock be worth on April 19th?

### Evaluation of a company: three-stage dividend growth model with declining growth

I am evaluating a firm using the three-stage dividend growth model with a linearly declining growth rate in Stage 2. I am using the following information (as of the start of 2004): * Current dividend is \$0.39 * I estimate the required rate of return on the stock at 8.72% * In stage 1, the dividend will grow at 11.3 percent

### Historical Growth Rate and Dividend Yields for a Company

The current dividend yield for a company in \$1.46 and the dividend eight years ago was \$0.585. The current stock price is \$80.00 What is the historical dividend growth rate for the company?

### Shares and Dividends

Please walk through the steps to do this on a TI BA II Plus and the rationale. Flanigan Corporation has just paid an annual dividend of \$1.50 per share (D0 = \$1.50). The dividend is expected to grow 5% per year for the next 3 years, and then 10% a year thereafter. Calculate FC's expected dividend per share for each of the

### Purchase Equipment, Pay Dividends, Pay Interest, & Capital

Which of the following events is an investing activity to a company? A) Purchase of equipment B) Payment of cash dividends C) Payment of interest D) Owners investment of additional capital into the company Please select one of the above stated answers.