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Dividends, Stock Repurchase and Policy

Finance Problems

The ABC Company currently has $200,000 market value and book value of perpetual debt outstanding carrying a coupon of rate of 6 percent. Its earnings before interest and taxes (EBIT) are $100,000 and it is zero growth company. ABC's current cost of equity is 10 percent and its tax rate is 40 percent. The firm has 10,000 shares o

Online primer practice table

Assume the entity is using US GAAP, accrual-basis accounting. For each of the following independent situations, determine the effect of that transaction on: net income; cash; total assets; total liabilities. Complete the primer exercise by filling in the chart, showing in each area either I (increase), D (decrease), or N

Capital structure and stock price

Please help with the following problem. Dabney Electronics currently has no debt. Its operating income is $20 million and its tax rate is 40 percent. It pays out all of its net income as dividends and has a zero growth rate. The current stock price is $40 per share, and it has 2.5 million shares of stock outstanding. If i

Auditing Questions (11-15)

11. When auditing inventories, an auditor would least likely verify that a. All inventory owned by the client is on hand at the time of the count. b. The client has used proper inventory pricing. c. The financial statement presentation of inventories is appropriate. d. Damaged goods and obsolete items have been properly ac

Surgical Supplies Corp.

Surgical Supplies Corp. paid a dividend of $1.12 over the last 12 months. The dividend is expected to grow at a rate of 25% over the next 3 years (supernormal growth). It will then grow at a normal, constant rate of 7% for the foreseeable future. The required rate of return is 12% (this will also serve as the discount rate).

EPS: Blue Skies Company

Blue Skies Company has earnings available for common stockholders of $4 million and has 1,000,000 shares of common stock outstanding at $120 per share. The firm is currently contemplating the payment of $4 per share in cash dividends. a. Calculate the firm's current earnings per share (EPS) and price/earnings (P/E) ratio b

Managerial Finance

XYZ Corporation has $4 million in earnings after taxes and 1 million shares outstanding. The stock trades at a P/E ratio of 20. The firm has $3 million in excess cash. a. Compute the current price of the stock. b. If the $3 million is used to pay dividends, how much will dividends per share be? c. If the $3 million is u

Stock Repurchase

Beta Industries has a net income of $2,000,000 and it has $1,000,000 shares of common stock outstanding. The company's stock currently trades @$32 a share. Beta is considering a plan in which it will use available cash to repurchase 20% of its shares in the open market. The repurchase is expected to have no effect on either net

Description of Stock Transactions

On January 1, Armada Corporation had 95,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per share. During the year, the following occurred Apr 1 Issued 15,000 additional shares of common stock for $17 per share. June 15 Declared a cash dividend of $ 1 per share to stockholders of

Green Manufacturing Financial Analysis

Green Manufacturing, Inc., plans to announce that it will issue $2 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will have a 6-percent annual coupon rate. Green is currently an all-equity firm worth $10 million with 500,000 shares of common stock outstanding. After the sale of the bonds, G

Stock Repurchase - Accounting Error Corrections

AC Co. began Operations in 2001 and has never been audited. You have been hired to audit their 12/31/04 financial statements. The books are kept on a cash basis. In the past the bookkeeper has prepared the tax return on the same basis as the books, thus no temporary differences were recognized. You are, therefore, assuming th

Financial Analysis for Target

Your parents have been left a substantial amount of money and want to invest in a company. Your father trusts you to make a recommendation, but also wants to see the reasoning behind your choice. You have an idea of which company to choose and you decide to prepare three sets of documents for your parents to consider: busines

What price is Payout selling today. What effect will the repurchase have on an investor who currently holds 100 shares and sell 1 of those shared back to the company in the repurchase? Payout decides to issue a 1 percent stock dividend instead of either issuing the cash dividend or repurchasing 1 percent of the outstanding stock. How would this action affect a shareholder who owns 100 shares of stock?

8.Cash Dividend-The stock of Payout Corp. Will go ex-dividend tomorrow. The dividend will be $0.50 per share, and there are 20,000 shares of staock outstanding. The market-value balance sheet for Payout is shown below a.What price is Payout selling today. b. What price will it sell for tomorrow? Ignore taxes Assets L

Ulrich Inc.

1. Ulrich Inc.'s articles of incorporation authorize the firm to issue 500,000 shares of $5 par-value common stock, of which 325,000 shares have been issued. Thos shares were sold at an average of 12 percent over par. In the quarter that ended last week, Ulrich earned $260,000 net income; 4 percent of that income was paid as a

Dividends versus repurchase option

Dividends versus Repurchases. Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,000 shares Outstanding. The firm will either pay a $1 per share dividend or repurchase $1,000 worth of stock. Ignore taxes. Assets Liabilities and Equity Cash $ 2,000 Debt

Investors: Computations based on financial reports

Required: a. Based on this data compute the following for 2003 and 2002: 1. % of earnings retained 2. Price/earning ratio 3. Dividend payout 4. Dividend yield 5. Book value per share b. Discuss your findings from the viewpoint of a potential investor. (See attached fil

Principles of Business

One of the important aspects of any company is its financial health. So, as part of your research , you plan to visit the company's websites and find the most recent financial statements for company in which you are interested. Research into one of the following companies : Pr

Dividend Policy

1. what is objective of capital structure management? 2. outline briefly the major advantage and disadvantage of paying dividends. 3. briefky describe agency costs of debt and tell why they are important to the determination of capital structure. 4. Why would a firm repurchase its own shares ? briefly explain any disadv

Dividend Policy

1.Some companies have investment opportunities well in excess of the earnings available to finance them but they will still insist on paying dividends. Why? 2. there is evidence to suggest that dividends have a stable pattern than earnings. what reasons can you suggest for management adopting a policy of paying stable dividen

Financial Analysis: Dividend Policy

1. Dividend Policy. Here are several assertions about typical corporate dividend policies. Which of them are true? Write out a corrected version of any false statements. - Most companies set a target dividend payout ratio. - They set each year's dividend equal to the target payout ratio times that year's earnings. - Manager

FA question

Tucker tool has 2001 sales of $10 million. It wishes to analyze expected performance and financing needs for 2003 - two years ahead. 1. the percent of sales for items that vary directly with sales are follows: Cash 4% Receivables 12% Inventory 18% Net fixed assets 40% Accounts payable 14% Accruals 4% Net profit margi

Key metrics and ratios of a company

Your work at Strident Marks has paid off in many thousands of dollars of profit sharing to you this year. You know it is best to diversify your investment and not put it all back into your company through stocks. So you decide to seek out additional publicly traded companies to invest in. Choose a publicly traded company you

Need help with the following study questions

1. Which of the following statements is most correct? a. A firm acquiring another firm in a horizontal merger will not have its required rate of return affected because the two firms will have similar betas. b. Financial theory says that the choice of how to pay for a merger is really irrelevant because, although it may affe

Strategic plans for Pfizer

Can anyone please help me with locating information on Pfizer's on the following: - Strategic Analysis and Choice - Plan Goals and Implementation - Financial Projections and Analysis Thank you.

Please solve for the following

In computing the cost of capital, do we use the historical costs of existing debt and equity or the current costs as determined in the market? a. Historical costs b. Current costs The cost of debt is less than the cost of preferred stock if both securities are priced to yield 10% and the company is in the 35 percent tax b


I have some information on Procter & Gamble (P&G) and wanted to see how I can add the following information - well explain the following information. In addition to showing Power Point slides to these 2 sections. a. Review the statement of cash flows for P&G for the three most recent fiscal years and identify how much


Start with the word document for the problem and then the excel

The board of directors of Akin & Gump

The board of directors of Akin & Gump, Inc., investment bankers is meeting to address the concerns of stockholders. Stockholders have submitted the following questions for discussion at the board meeting. Answer each question. 1. Why did Akin & Gump organize as a corporation if a corporation must pay an additional layer of

Accounting What the numbers mean

United States Worldwide I just need to add a conclusion to this analysis. Intel Group Project-Analysis United States Worldwide Founded in 1968, Intel Corporation now employees an estimated 99,900 employees in 294 worldwide offices and facilities. For de