Explore BrainMass
Share

# Accounting for Corporations

### Stock Price/ Portfolio beta / Investment

1.- Malenke's Incorporated paid a dividend (Do) of \$2.00 this morning. Malenke's stockholders require a 20 percent of return. Calculate Malenke's stock price under the following scenarios: Malenke's earnings and dividends remain constant forever. Malenke's earnings and dividends grow at a rate of 10 percent forever. Malenke'

### Shares and control

What if the percentage is less than 40%? Could a company still exercise significant control? Why or why not? Note: The percentages meaning the situation where a large company would purchase substantial stock of another to have some control over it.

### Assume that Vogl stock is priced at \$50 per share and a dividend of \$1 per share. An investor's purchases the stock on margin, paying \$30 per hare and borrowing the remainder from the brokerage firm at 10% annualized interest. If, after one year, the stock is sold at a price of \$60 per share, what is the return to the investors?

Assume that Vogl stock is priced at \$50 per share and pays a dividend of \$1 per share. An investor's purchases the stock on margin, paying \$30 per hare and borrowing the remainder from the brokerage firm at 10% annualized interest. If, after one year, the stock is sold at a price of \$60 per share, what is the return to the inves

### Solving the value of a share of stock

Micro, Inc. will pay a dividend of \$2.30 per share next year. If the company plans to increase its dividend by 9% per year indefinitely, and you require a 12% return on your investment, what should you pay for the company's stock?

### Sloan Corp. cumulative preferred stock

Question 15. At December 31, 2007 and 2008, Sloan Corp. had outstanding 9,000 shares of \$100 par value 8% cumulative preferred stock and 30,000 shares of \$10 par value common stock. At December 31, 2007, dividends in arrears on the preferred stock were \$36,000. Cash dividends declared in 2008 totaled \$135,000. What amounts we

### Corporations and Dividends

Fairmount Inc., a developer of radiology equipment has stock outstanding as follows: 15,000 shares of cumulative 2%, preferred stock of \$15 par, and 50,000 shares of \$5 par common. During it's first four years of operation, the following amounts were distributed as dividends year1: \$30,000, year 2 \$42,000, year 3 \$90,000, year

### Increased in Dividend Payment Interpretation

Under which conditions an increase in dividend payment can be interpreted as a signal of a. Good news b. Bad news

### Milroy Corporation

The stockholders' equity section of Milroy Corporation as of December 31, 2003, was as follows: Common stock, par value \$2; authorized 20,000 shares; issued and outstanding 10,000 shares \$20,000 Paid-in capital in excess of par 30,000 Retained earnings \$90,000 Total \$1

### Dividends and retained earnings

Gonzalez Company has 350,000 shares of \$10 par value common stock outstanding. During the year, Gonzalez declared a 10% stock dividend when the market price of the stock was \$30 per share. Four months later Gonzalez declared a \$.50 per share cash dividend. As a result of the dividends declared during the year, retained earnings

### Ohio Freight Company's

The Ohio Freight Company's common stock is selling for \$40 the day before the stock goes ex-dividend. The annual dividend yield is 6.7 percent and dividends are distributed quarterly. Based solely on the impact of the cash dividend, by how much should the stock go down on the ex-dividend date? What will the new price of the stoc

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 i

### Clear Alcohol Company issued bonds along with warrant

At the start of the year the Clear Alcohol Company issued \$18,000,000 of 12% bonds along with warrants to buy 1,200,000 shares of its \$10 par value common stock at \$18 per share. The bonds mature over the next 10 years, starting one year from date of issuance, with annual maturities of \$1,800,000. At the time, the Clear Alcohol

### Degree of Financial Leverage at a Base Level EBIT

4. Parker Investments has EBIT of \$20,000, interest expense of \$3,000, and preferred dividends of \$4,000. It pays taxes at a rate of 38%, what is Parker's degree of financial leverage (DFL) at a base level EBIT of \$20,000?

### Share of Stock Worth

J Lee Imports paid a \$1.00 per share annual dividend last week. Dividends are expected to increase by 5% annually. What is one share of this stock worth to you today if the appropriate discount rate is 14%?

### Calculating shares of stock, earnings per share, and market price of common stock.

I'm not sure exactly how to get started. The more I read into it, the more ways I find to come up with solutions and they are all different. Any help would be greatly appreciated. Here is the problem. A corporation is planning to expand its business and needs \$30,000,000. The company believes that a 12-year term loan can be n

### Are companies obligated to pay dividends on common stock?

Are companies obligated to pay dividends on common stock? Explain.

### Dividend Discount Model: Current Market Value

Question: Assume RHM is expected to pay a total cash dividend of \$5.60 next year and its dividends are expected to grow at a rate of 6% per year forever. Assuming annual dividend payments, what is the current market value of a share of RHM stock if the required return on RHM common stock is 10%?

### Expected Dividend Per Share (DPS) Calculation

Warr Corporation just paid a dividend of \$1.50 a share. The dividend is expected to grow 7% a year for the next 3 years and then at 5% a year thereafter. What is the expected dividend per share for each of the next 5 years?

### Stock Repurchase Shares & Value of Operations

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

### How much profit will Grant make if he exercises the option today and sells the shares?

Grant purchased one call on XYZ stock at an exercise price of \$25. The market price of XYZ stock when Grant purchased the call was \$24 a share. XYZ is currently priced at \$30 a share. Grant paid \$120 to buy the call. How much profit will Grant make if he exercises the option today and then sells the shares? Ignore all transactio

### Company's Cash Dividends and Annual Report

A company's cash dividends were \$3.96 per share of common stock for calendar 2008. In 2009 the stock was split 3 for 1, and in 2010 a 10% stock dividend was issued. Dividends per share for 2008, to be reported in the firm's annual report for 2010 are what?

### Dividend Issue and Outstanding Shares

The balance sheet caption for common stock is: Common stock, \$10 par value, 7,000,000 shares authorized, 5,700,000 shares issued, 5,500,000 shares outstanding. (1.) Calculate the dollar amount that will be presented opposite of this caption. (2.) Calculate total amount of a cash dividend of \$1.00 per share. (3.) What acc

### Dividend and Discount Rate: Williams Inc.

Williams Inc. is expected to pay a \$3 dividend next year and that dividend is expected to grow at 4% every year thereafter. If the discount rate is 10%, what would be the present value of the expected dividend stream (aka the expected price of the firm's stock)? a. 50.00 b. 30.00 c. 0.50 d. 75.00 e. 55.00.

### Determining Goode's Last Dividend

Goode Inc.'s stock has a required rate of return of 11.50%, and it sells for \$25.00 per share. Goode's dividend is expected to grow at a constant rate of 7.00% per year. What was Goode's last dividend, D0? a. \$0.95 b. \$1.05 c. \$1.16 d. \$1.27 e. \$1.40

### If this year's year-end dividend is \$8 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM?

8. The FI Corporation's dividends per share are expected to grow indefinitely by 5% per year. a. If this year's year-end dividend is \$8 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM? -----

### Common Stock Dividends and Stockholders

Wiley, Inc. has 50,000 shares of \$10 par value common stock and 25,000 shares of \$10 par value, 6%, cumulative, participating preferred stock outstanding. Dividends on the preferred stock are one year in arrears. Assuming that Wiley wishes to distribute \$135,000 as dividends, the common stockholders will receive 1. \$80,000.

### Payout Corp goes ex-dividend tomorrow: What is price of the stock today & tomorrow

The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be .50 per share, and there are 20,000 shares of stock outstanding. The market value balance sheet for Payout is shown on the following table. Assets Liabilities and Equity Cash \$100,000 Equity \$1,000,000

### Acap Corp: cost of capital, dividends, current and future stock price

Suppose Acap Corp. will pay a dividend of \$2.80 per share at the end of this year and \$3.00 per share next year. You expect Acap's stock price to be \$52.00 in two years. If Acap's cost of capital is 10%: a. What price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two year

### Cost of the newly issued preferred shares

Seven Eleven Stores is planning an expansion project that it desires to finance with newly issued preferred stock. The firm has an outstanding issue of preferred stock that pays a dividend of \$4.25 per share, which is trading for \$65 a share. The investment bankers have advised Seven Eleven that floatation costs will be 8% per s

### Strasburg Company: How much was last year's dividend per share?

After a 5-for-1 stock split, the Strasburg Company paid a dividend of \$0.75 per new share, which represents a 9% increase over last year's pre-split dividend. What was last year's dividend per share?