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Issuing Equity

Determining Cost of Equity: Bunkhouse Electronics

Bunkhouse Electronics is a recently incorporated firm that makes electronic entertainment systems. Its earnings and dividends have been growing at a rate of 30 percent, and the current dividend yield is 2 percent. Its beta is 1.2, the market risk premium is 8 percent, and the risk-free rate is 4 percent. a. Calculate two estima

Items affecting stockholders' equity

I am needing assistance with the following I think I understand but want to be sure. For each of the following events affecting the stockholders' equity of Haulmarke, indicate whether the event would: increase retained earnings IRE), decrease retained earnings (DRE), increase common stock (ICS), or decrease common stock (DCS)

Computing Elements of Owners' Equity

Computing Elements of Owners' Equity From the information provided, determine: 1. The amount of retained earnings at December 31. 2. The amount of revenues for the period. Totals January 1 December 31 Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,000 $ 15,000 All other assets . .

Reporting and Analyzing Stockholders' Equity

Problem Set P11-2A The stockholders' equity accounts of Alpha Corporation on January 1, 2007, were as follows. Preferred Stock (8%, $100 par noncumulative, 5,000 shares authorized) $400,000 Common Stock ($5 stated value, 300,000 shares authorized) $1,000,000 Paid-in Capital in Excess of Par Value?Preferred Stock $15,00

Stockholders' Equity: Sam Hurd Company

Sam Hurd Company has the following items: common stock, $720,000; treasure stock, $85,000; deferred taxes, $100,000 and retained earnings, $313,000. What amount should Sam Hurd Company report as stockholders' equity?

Statement of Shareholder's Equity

1. The following is a condensed version of the statement of shareholders' equity for Dell Computer Corporation for fiscal year ending January 31, 2003 (in millions of dollars): Balance at February 1, 2002 4,694 Net income 2,122 Unrealized gain on debt investments 26 Unrealized loss on derivative instruments (

Total value of Icarus Airlines

Ircarus Airlines is proposing to go public and you have been given the task of estimating the value of its equity. Management plans to maintain debt at 30 percent of the company's present value, and you believe that at this capital structure the company's debtholders will demand a return of 6 percent and stockholders will requi

Impact on Stockholder's Equity

On October 31, the stockholders' equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000. Omar is considering the following two courses of action: (1) declaring a 5% stock dividend on the 60,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par

Finding Financing

Rhonda Allegro has spent most of her spare time in the last 10 months either in the library at the local university or at the Small Business Development Center (SBDC) housed there. A little more than a year ago, she decided to launch a retail music store specializing in musical instruments, supplies, and hard-to-find sheet music

Beta, Cost of Equity, Style portfolios

Please see the attached file. 1. The cost of equity for Ryan Corporation is 8.4%. If the expected return on the market is 10% and the risk-free rate is 5%, then the equity beta is ___ 2. The beta of a firm is more likely to be high under what two conditions? high cyclical business activity and low operating leverage hi

Two transactions combined

Stock purchased at $3,000 is sold for $3,500. As a result what would be the two transaactions combined. a) income will increase by $500 b)stockholders equity will increase by $3,500 c)stockholders equity will increase by $500 d) stockholders equity will not change My choice was c. the equity will increase by $500

Cost Equity multiple choice

Obi-Wan's common stock has a beta of 1.4. If the risk-free rate is 3 percent and the market risk premium is 15 percent, what is Obi-Wan's cost of equity? a. 16.80%. b. 19.80%. c. 21.00%. d. 24.00%.

Cost of Equity multiple choice

Yoda Co.'s most recent dividend was $1.50 per share, and dividends are expected to grow at a 5 percent annual rate indefinitely. The stock sells for $30 per share. What is Yoda's cost of equity? a. 10.00% b. 10.25%. c. 11.00%. d. 11.25%.

Cost of external equity

Q: Lattimore, Inc. is issuing new common stock at a market price of $22. Dividends last year were $1.15 per share and are expected to grow at a rate of 7%. Flotation costs will be 5% of the market price. What is Lattimore's, Inc.'s cost of external equity?

Stockholders' Equity

Instructions Prepare the stockholders' equity section at December 31, assuming $100,000 of retained earnings is restricted for plant expansion. The following accounts appear in the ledger of Sycamore Inc. after the books are closed at December 31, 2007. Common Stock (no-par, $1 stated value, 400,000 shares authorized, 20

Pazini Co.: How Equity Would Change

See the attached file. In the first column is the equity section of Pazini Co. Consider each of the following to be independent. a. In the second column show how the equity section would change if the company paid a 10% stock dividend when the market value of the stock was $20 per share. b. Ignore "a" above. In the third co

Cost of Common Equity With and Without Flotation

A company's next expected dividend, D1, is $3.18; its growth rate is 6%; the stock now sells for $36. New stock (external equity) can be sold to net the firm $32.40 per share. a. what is the company's cost of retained earnings, ks? b. what is the company's percentage of flotation cost, F? c. what is the company's cost of

Stockholders equity : explained

See attachment need to verify my work, submit your work for comparison. QS-13-2 Prepare the journal entry to record each separate transaction. (a) On March 1, DVD Co. issues 44,500 shares of $4 par value common stock for $255,000 cash. (b) On April 1, GT Co. issues no-par value common stock for $50,000 cash. (c) On April 6,

Gain on sale of equity investment

Kimm, Inc. acquired 30% of Carne Corp.'s voting stock on January 1, 2007 for $400,000. During 2007, Carne earned $160,000 and paid dividends of $100,000. Kimm's 30% interest in Carne gives Kimm the ability to exercise significant influence over Carne's operating and financial policies. During 2008, Carne earned $200,000 and paid

Debt versus Equity financing

We know that debt and equity are the two sources of financing for businesses. Equity comes from owners and shareholders who take business risks when investing their money and involves certain risks for those owners. What is involved in a company's efforts to obtain debt financing from a bank or commercial funding source?

Cost of Equity and beta

1. I have selected a company for my project of Walmart. It has a beta coefficient of ( .2) If I know that the present yield on US government bonds maturing in one year(about 4.5% annually) and an assessment that the market risk premiums 6.5% (the difference between the expected rate of return on the market portfolio and the ris

The answer to Stockholders equity transactions

Sands Corporation has the following capital structure at the beginning of the year: 6% preferred stock, $50 par value, $300,000 20,000 shares authorized, 6,000 shares issues and outstanding Common stock $10 par value 60,000 shares authorized $40

Playing the Numbers Game

1. Jack Brown realizes that the first thing he must do is compare the liquidity, leverage, activity, and profitability ratios of the two companies. Using the income statement and balance sheet data shown in Tables 1-4 prepare a detailed comparison report indicating the strengths and weaknesses of each company. 2. Jay Singh, a

Cost of Equity for Slante Corp

The Slante Corporation is a zero growth firm with an expected EBIT of $100,000 and a corporate tax rate of 30 percent. Kimberly uses $500,000 of 12.0 percent debt financing, and the cost of equity to an unlevered firm in the same risk class is 16.0 percent. A. What is the value of the firm according to MM with corporate taxe

Journalize stock transactions, post, and prepare paid-in

Question 1 How should I journalize stock transaction, post and prepare paid in capital section. LJ's Corporation was organized on January 1, 2006. It is authorized to issue 20,000 shares of 6%, $50 par value preferred stock, and 500,000 shares of no-par common stock with a