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Accounting for Corporations

Stock purchase on margin..

An investor bought on margin 100 shares of Copier Corp. for $85 a share. The firm paid an annual dividend of $4 a share; the margin requirement was 60 percent with an interest rate of 8 percent on borrowed funds, and commissions on the purchase and sale were $75. The price of the stock rose $120 in one year. a. What is the

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

Dividend Paid Calculation

Mikes Meats reports retained earning for 2005 as $490,000. On its 2006 financial statement it reports $60,000 of net income and it ended 2006 with $510,000 of retained earnings. How much was paid as dividends to share holders in 06'?

Determining Current Stock Price

Jeff's Bikes last dividend was $1.00. Jeff's dividend growth rate is expected to be constant at 15% for two years. Then dividends are expected to stay at 10% indefinitely. Jeff's required return is 12%. What should Jeff's current stock price be?

Value of firm's operations; how many shares remain

A firm has 10 million shares outstanding with a market price of $20 per share. The firm has $25 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has no other financial investments or any debt. What is the firm's value of operations, and how many shares will remain after the re

What is expected annual dividend growth rate

Today's selling stock price is $50, dividend paid yesterday of $5. Dividend expected to grow steadily at 10% next 2 yrs. Required rate of return 15%. What is expected annual growth rate after yr 2?

Flotation Cost: How Many Shares Will Be Issued?

The firm needs to raise $10 million. Assuming that flotation costs are expected to be $15 per share, and that the market price of the stock is $120, how many shares would have to be issued? What is the dollar size of the issue?

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

How many shares of stock remain once debt is issued

Northwestern Lumber Products currently has 15,000 shares of stock outstanding. Patricia, the financial manager, is considering issuing $120,000 of debt at an interest rate of 6.75 percent. Given this, how many shares of stock will be outstanding once the debt is issued if the break-even level of EBIT between these two capital st

Dividends Per Share of Common Stock: Iguana Inc.

Iguana Inc. has 100,000 shares of common stock outstanding. Additionally, the company has 1000 shares of 100 par value, 5% cumulative preferred stock outstanding. This year, the board of directors has allocated $50,000 to pay dividends. If the Iguana did not pay dividends last year, what will be the company's dividends per shar

Dividends to its preferred stockholders

Zebra inc. 2000 shares of $80 par value, 5% cumulative preferred stock outstanding. If the company has one year of dividends in arrears, how umch will zebra pay out to as dividends to its preferred stockholders this year?

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

Dividend growth model MCQ

Base this answer on the dividend growth model. If you expect the market rate of return to increase across the board on all equity securities then you should also expect: an increase in all stock values all stock values to remain constant a decrease in all stock values dividend paying stocks to maintain a constant price whil

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

Distribution of Dividends between Preferred and Common stock

Harris Company has 1,000 shares of $200 par value, 6, percent cumulative preferred stock outstanding and 5,000 shares of $40 par value common stock. In 2004, 2005, and 2006, Harris Company declared dividends of $10,000, $8,000 and $40,000, respectively. Determine the distribution of dividends between preferred stock and common

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

Financing and dividends

Hello, Please assist in explaining the following questions: What factors does a firm consider when determining sources of financing? Why would a firm continue to pay dividends when it needs financing to support its business? Thank you!

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

Types of dividends that a company can pay out

Can you help me get started with this assignment? What are the different types of dividends that a company can pay out? Which type would you prefer? Explain why. When should a company pay dividends?

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

Earnings per Share: Reported Data Example Question

Ace Company had 200,000 shares of common stock outstanding on December 31, 2008. During the year 2009 the company issued 8,000 shares on May 1 and retired 14,000 shares on October 31. For the year 2009 Ace Company reported net income of $249,690 after a casualty loss of $40,600 (net of tax). What earnings per share data shoul

Expected year-end dividend

McLaughlin Inc.'s stock has a required rate of return of 10.50%, and it sells for $67.50 per share. McLaughlin's dividend is expected to grow at a constant rate of 7.00% per year. What is the expected year-end dividend, D1?

McLaughlin Inc's Expected Year-End Dividend

9. McLaughlin Inc.'s stock has a required rate of return of 10.50%, and it sells for $67.50 per share. McLaughlin's dividend is expected to grow at a constant rate of 7.00% per year. What is the expected year-end dividend, D1? $2.13 $2.36 $2.60 $2.86 $3.14.

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

Corporation's Board of Directors Declare Stock Dividend

On August 26, 20x8 a corporation's board of directors declared a 2% stock dividend applicable to outstanding shares of it $5 par value common stock, of which 150,000 are authorized, 130,000 are issued and 10,000 are held in treasury. The stock dividend was distributable on September 25 to stockholders of record on September 10.

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