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Accounting for Corporations

Norman's Cabinet, Inc. Equity dividends

1. Norman's Cabinet, Inc., had net income of $424,800 for its fiscal year ended October 31, 2009. During the year, the company had outstanding 53,000 shares of 9 percent $60 par value preferred stock, and 18,480 shares of common stock. 2 The balance sheet caption for common stock is: Common stock, no par value, 7,000,000

Issue and redemption of shares

ABC Ltd, a public company intends to redeem 100000 $1 redeemable shares at $1.5each. the shares were originally issued at a premium of $0.3 per share. To finance the redemption, 80000 new $1 shares are issued at par at the same time. ABC Ltd also plans to reissue the 100,000 shares which have just been redeemed to the public at

This post addresses dividends and related issues.

Dividends are said to be the basis for the value of stocks. If that's true, how do we explain the fact that companies that pay no dividends often have substantial market value? (Such companies are usually relatively young and in high growth fields.) First explain the phenomenon in terms of the individual valuation model (

Dividends in General

Dividends have been in the news often due to the fact that government would provide tax benefits to dividend paying companies. Technology companies typically pay low or no dividends since they reinvest cash flows in research and development to fund future growth. However, as many technology companies mature (e.g. Microsoft, Dell

Choosing Financial Targets & Dividend Plans - Bixton Company

(Choosing financial targets) Bixton Company's new chief financial officer is evaluating Bixton's capital structure. She is concerned that the firm might be underleveraged, even though the firm has larger-than-average research and development and foreign tax credits when compared to other firms in its industry. Her staff prepared

Stock dividend shares calculation

Please help with the following problem. On January 1, 2010, Metco, Inc., had 264,000 shares of $2 par value common stock issued and outstanding. On March 15, 2010, Metco, Inc., purchased for its treasury 3,100 shares of its common stock at a price of $39.00 per share. On August 10, 2010, 640 of these treasury shares were sol

Fast Grow Corporation Dividends: What is value of common stock?

Fast Grow Corporation is expecting dividends to grow at a 20% rate for the next 2 years. The corporation just paid a $2 dividend and the next dividend will be paid 1 year from now. After 2 years of rapid growth dividends are expected to grow at a constant rate of 9% forever. a/ If the required return is 14%, what is the value

Estimating Dividends in the Dividend-Discount Model

DFB, Inc., expects earnings this year of $5 per share, and it plans to pay a $3 dividend to shareholders. DFB will retain $2 per share of its earnings to reinvest in new projects with an expected return of $15% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the

Dividend Smoothing

The Sharpe Co. just paid a dividend of $1.50 per share of stock. Its target payout ratio is 40 percent. The company expects to have an earnings per share of $4.15 one year from now. a. If the adjustment rate is .3 as defined in the Lintner model,what is the dividend one year from now? b. If the adjustment rate is .6 instead,w

Outstanding Issued Shares

The authorized share capital of the Alfred Cake Company is 100,000 shares. The equity is currently shown in the company's books as follows: Common Stock ($.50 par value) $40,000 Additional paid-in capital 10,000 Retained earnings 30,000 Common Equity 80

MBA degree Q9: Dividend constraints

MBA degree Q9: Dividend constraints-see attachment Dividend constraints A firm with 25,000 common shares outstanding has $800,000 of common share financing and $40,000 of retained earnings (including the current year's invested earnings) on the balance sheet. In the current year, the firm has $29,000 of earnings availabl

Deeg Inc: Calculation of Investment in Shares and Options

You are a portfolio manager and you are of the opinion that Deeg Inc. shares will rise from its current levels of R200. You are seriously considering purchasing some of these shares. You currently have R400 000 to invest. You are also considering buying call options on Deeg shares instead of the shares itself. These options exp

Aaron Burr Corporation: common stockholders and dividends

Aaron Burr Corp. had $100,000 of 10%, $20 par value preferred stock and 12,000 shares of $25 par value common stock outstanding throughout 2007. (a) Assuming that total dividends declared in 2007 were $88,000, and that the preferred stock is not cumulative but is fully participating, common stockholders should receive 2007 di

Dividends - Bowles Sporting Inc.

Bowles Sporting Inc. is prepared to report the following income statement (shown in thousands of dollars) for the year 2009. Sales $15,200 Operating costs including depreciation 11,900 EBIT $3,300

Salvage Value Paid in Cash

Baba Company established on January 1st 2005 with 500 common shares at $1,000.00 per share. The company received full amount of capital in cash from stockholders and deposited to bank at same day. The followings are the business transactions during the year 2005. 1. Rent a warehouse with office at $1,000.00 per month startin

Business Cycles and Economic Outlook: Purchase of Coca Cola Company shares

1. Today how many Coca Cola Company shares can you purchase with $1000 even if the brokerage fee is waived? 2. From mid-APR 10 to now, how many Coca Cola shares you have and multiply by the current stock price. Did it go up, down or remain the same? 3. What were some major factors seem to affect the growth of Coca Cola

T/F Questions About Stock and Company Dividend Reinvestment Plans

Indicate whether the following statements are true or false. If the statement is false, explain why. a. If a firm repurchases its stock in the open market, the shareholders who tender the stock are subject to capital gains taxes. b. If you own 100 shares in a company's stock and the company's stock splits 2-and-1, you will

Determining ex-dividend price

A model that incorporates tax effects into determining the ex-dividend price is; (P0-Px)/D=(1-Tp)/(1-Tg) where P0 is the price just before the stock goes ex, Px is the ex-dividend share price, D is the amount the dividend per share, Tp is the relevant marginal personal tax rate on dividends and Tg is the effective marginal ta

On July 1, 2011, Mountain Systems acquired 8,000 shares of Precision Services

27. (6 points) On July 1, 2011, Mountain Systems acquired 8,000 shares of Precision Services' 40,000 outstanding common shares at a cost of $240,000. The book value of Precision's net assets on that date was $880,000. The following data pertain to Precision Services for 2011: Net income reported in 2011: January 1 - June 30

Common Stock Issues Described

Obtain an annual report information for Juniper Networks, Inc. (10k report) year 2007 and 2008. As on December 31, 2008: How many shares of common stock was Juniper Networks authorized to issue? How many shares were issued? How many shares were outstanding? The companies' primary products and services? Thanks for your

Common Stock and Dividends Payable

Can you determine the amounts of the transactions on 7/21;8/15; 12/4 and 12/24. I have tried these problems but keep getting the amounts incorrect. Mindy Feldkamp and her two colleagues, Oscar Lopez and Lori Melton, are personal trainers at an upscale health spa/resort in Tampa, Florida. They want to start a health club th

Regional Software: Dividend Adjustment Model

Regional Software has made a bundle selling spreadsheet software and has begun paying cash dividends. The firm's chief financial officer would like the firm to distribute 25% of its annual earnings (POR = 0.25) and adjust the dividend rate to changes in earnings per share at the rate ADJ = 0.75. Regional paid $1.00 per share in

Dividend Valuation: Using Information on Stock Value

Larry, Moe and Curly are brothers. They're all serious investors, but each has a different approach to valuing stocks. Larry likes to use a 1 year holding period to value common shares. Moe likes to use multiyear holding periods. Curly prefers the dividend valuation model. As it turns out, all three of them are looking at the sa

Value of Shares: Dupont, Hooks Athletics, AT&T, Boeing, Johnson

Determine the value of a share of DuPont Series A $4.50 cumulative preferred stock, no par, to an investor who requies a 9 percent rate of return on this security. The issue is callable at $120 per share plus accrued dividens. However, the issue is not expected to be called at any time in the foreseeable future. Hooks Athle

Executive Chalk Is financed solely by common stock and has outstanding 25 million shares with a market price of $10 a share. It now announces that intends to issue 160 million of new debt and to use the proceeds to buy back common stock. Show all your work.

Executive Chalk Is financed solely by common stock and has outstanding 25 million shares with a market price of $10 a share. It now announces that intends to issue 160 million of new debt and to use the proceeds to buy back common stock. Show all your work. a. How is the market price of a stock affected by the announcement?

Worldwide Inc.: What is the expected dividend Expected and the price?

41. Worldwide Inc., a large conglomerate, has decided to acquire another firm by purchasing the firm's outstanding stock from the stockholders. Analysts of the firm to be purchased are forecasting a period of 2 years of extraordinary growth (20 percent), followed by 1 year of unusual growth (10 percent), and finally a normal (s

Flotation costs; dividend policies for Crystal Cargo Inc.

(Flotation Costs and issue size) Your Firm needs to raise $10 million. Assuming that flotation costs are expected to be $15 per share, and that the market price of the stck is $120, how many shares would have to be issued? What is the dollar size of the issue? (Dividend policies) The earnings for Crystal Cargo Inc. has bee