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Dividends and Taxes, Stock Split and Stock Dividend

Looking for assistance with the attached Excel spreadsheet utilizing Excel formulas to solve.

#1 Midnight Hour Inc gas declared a $5.10 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15%. New IRS regulations require that taxes be withheld at the time the dividend is paid. Midnight Hour sells for $83. per share, and the stock is about to go ex-dividend. What do you think the ex-dividend will be?

Roll Corp currently has 240,000 shares of stock outstanding that sell for $86 per share. Assuming no market imperfections or tax effects exist, what will be the share price after:
a. RC has a five-for-three stock split?
b. RC has a 15% stock dividend?
c. RC has a 42.5 % stock dividend?
d. RC has a four-for-seven reverse stock split?

#7. The market value balance sheet for outbox manuf is shown here. Outbox has declared a 25% stock dividend. The stock goes ex dividend tomorrow. There are 30,000 share of stock outstanding. What will the ex-dividend price be?

Cash $145,000 Debt $127,000
Fixed Assets 598,000 Equity 616,000
total 743,000 743,000

#16. The sharpe co just paid a dividend of 1.60 per share of stock. Its target payout ratio is 40%. The company expects to have earnings per share of $6.20 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?


Solution Preview

See the attached file.


Dividend $5.10
Dividend Tax 15%
Stock Price $83

Step 1: Calculate the After-Tax Dividend $4.34
Step 2: Ex-Dividend Price = $78.67

CHAPTER 16: PROBLEM 4 (a thru d)

# of shares of stock ...

Solution Summary

This solution provides the calculations needed, along with required formulas, in the attached Excel file.