Nikulbhai Ace Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years, but is currently contemplatingsome kind of dividend.The capital accounts for the firm are as follows:Common stock (3,000,000 shares at $5 par)Capital in excess of par*Retained earningsNet worth$ 15,000,0006,000,00024,000,000$ 45,000,000*The increase in capital in excess of par as a result of a stock dividend is equal to the new shares created times (Market price - Parvalue).The company's stock is selling for $10 per share. The company had total earnings of $3,000,000 during the year. With 3,000,000shares outstanding, earnings per share were $1. The firm has a P/E ratio of 10.a. What adjustments would have to be made to the capital accounts for a 10 percent stock dividend? Show the new capital accounts.Note: Do not round intermediate calculations. Input your answers in dollars, not millions (e.g. $1,230,000).Common stockCapital in excess of parRetained earningsNet worth$0

Stock dividend is a redistribution of retained earnings.It increases the number of shares and…

Answered: Ace Products sells marked playing cards…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 11P

See similar textbooks

Similar questions

The equity of Blooming Roses has a total market value of $16,000. Currently, the firm has excess cash of $1,200 and net income of $15,400. There are 750 shares of stock outstanding. What will be the percentage change in the stock price per share if the firm pays out all of its excess cash as a cash dividend?
A firm has a market value equal to its book value. Currently, the firm has $500,000 of excess cash, $4,500,000 in other assets, $1,000,000 in liabilities, $40,000 in common stock at $1 par, $0 in retained earnings, and $30,000 in net income. Assume that the firm uses all of its excess cash to repurchase some of its shares outstanding. How many shares will be outstanding after the repurchases are completed? (Round, if necessary, your final answer to the whole number).
Ace Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years, but is currently contemplating some kind of dividend. The capital accounts for the firm are as follows: Common stock (3,000,000 shares at $5 par) Capital in excess of par* Retained earnings Net worth *The increase in capital in excess of par as a result of a stock dividend is equal to the new shares created times (Market price - Par value). The company's stock is selling for $10 per share. The company had total earnings of $3,000,000 during the year. With 3,000,000 shares outstanding, earnings per share were $1. The firm has a P/E ratio of 10. a. What adjustments would have to be made to the capital accounts for a 10 percent stock dividend? Show the new capital accounts. Note: Do not round intermediate calculations. Input your answers in dollars, not millions (e.g. $1,230,000). Common stock Capital in excess of par Retained earnings Net worth EPS Stock price $ Number of shares $…
Bonanza Billiard Games is an all-equity firm with 50 million shares outstanding, which are currently trading at $22 per share. Last month, Bonanza announced that it will change its capital structure by issuing $300 million in debt. The $200 million raised by this issue, plus another $200 million in cash that Bonanza already has, will be used to repurchase existing shares of stock. Assume that capital markets are perfect.• What is the market capitalization of the company before the transaction takes place?• What is the market capitalization of the company after the transaction takes place?
Tucker’s National Distributing has a current market value of equityof $10,665. Currently, the firm has excess cash of $640, total assetsof $22,400, net income of $3,210, and 500 shares of stock outstanding.Tucker’s is going to use all of its excess cash to repurchase sharesof stock. What will the stock price per share be after the stockrepurchase is completed?
Suppose that Papa Bell, Inc.'s equity is currently selling for $56 per share, with 4.1 million shares outstanding. Assume the firm also has 18,000 bonds outstanding, and they are selling at 95 percent of par. What are the firm's current capital structure weights? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
3. (a): The stock price for Bank Muscat was OMR 100 per share one year ago. The stock is currently trading at OMR 92 per share. Shareholders just received OMR 20 as dividend. Calculate the "Return" was earned over the past year? (b): First find W, and then calculate the "Weighted average" cost of capital of a Company from the following table details: Capital Component Amount WCost Debt Preferred Stock Common Stock 40,000 5% 30,000 6% 50,000 4%
c) Tucker’s National Distributing has a current market value of equity of $10,665. Currently, the firm has excess cash of $640, total assets of $22,400, net income of $3,210, and 500 shares of stock outstanding. Tucker’s is going to use all of its excess cash to repurchase sharesof stock. What will the stock price per share be after the stockrepurchase is completed?
A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,800 and other assets of $5,700. Equity is worth $7,500. The firm has 750 shares of stock outstanding and net income of $1,500. The firm has decided to spend all of its excess cash on a share repurchase program. How many shares of stock will be outstanding after the stock repurchase is completed?
Tucker’s National Distributing has a current market value of equity of $10,665. Currently, the firm has excess cash of $640, total assets of $22,400, net income of $3,210, and 500 shares of stock outstanding. Tucker’s is going to use all of its excess cash to repurchase sharesof stock. What will the stock price per share be after the stockrepurchase is completed?
Suppose Beta Industries and Delta Technology have identical assets that generate identical cash flows. Beta Industries is an all-equity firm, with 7 million shares outstanding that trade for a price of $16.00 per share. Delta Technology has 22 million shares outstanding, as well as debt of $33.60 million. a. According to MM Proposition I, what is the stock price for Delta Technology? b. Suppose Delta Technology stock currently trades for $8.27 per share. What arbitrage opportunity is available? What assumptions are necessary to exploit this opportunity? a. According to MM Proposition I, what is the stock price for Delta Technology? According to MM Proposition I, the stock price per share for Delta Technology is $ (Round to the nearest cent.)
Suppose Sigma Industries and Pi Technology have identical assets that generate identical cash flows. Sigma Industries is an all-equity firm, with 9 million shares outstanding that trade for a price of $18.00 per share. Pi Technology has 24 million shares outstanding, as well as debt of $48.60 million. a. According to MM Proposition I, what is the stock price for Pi Technology? b. Suppose Pi Technology stock currently trades for $12.68 per share. What arbitrage opportunity is available? What assumptions are necessary to exploit this opportunity?

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

SEE MORE TEXTBOOKS