Carla Vista Co. has had 4 years of record earnings. Due to this success, the market price of its 470,000 shares of $2 par value commonstock has increased from $15 per share to $54. During this period, paid-in capital remained the same at $2,820,000. Retained earningsincreased from $4,230,000 to $28,200,000. CEO Don Ames is considering either (1) a 15% stock dividend or (2) a 2-for-1 stock split.He asks you to show the before-and-after effects of each option on (a) retained earnings, (b) total stockholders' equity, and (c) parvalue per share.(a)1.Your answer is partially correct.2.Stock dividend-retained earnings$2-for-1 stock split retained earnings $24,393,00028,200,000 (b)Paid-in capitalRetained earningsTotal stockholders' equityShares outstanding(c)12$Original BalancesStock dividend par value per share2-for-1 stock split-par value per share$$After DividendAfter Split000

Stock Dividend:Stock Dividend is the issuance of shares by the company in the form of dividend to…

Answered: Carla Vista Co. has had 4 years of…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 5P

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Ferrell Inc. recently reported net income of $8 million. It has 720,000 shares of common stock, which currently trades at $55 a share. Ferrell continues to expand and anticipates that 1 year from now, its net income will be $12.8 million. Over the next year, it also anticipates issuing an additional 252,000 shares of stock so that 1 year from now it will have 972,000 shares of common stock. Assuming Ferrell's price/earnings ratio remains at its current level, what will be its stock price 1 year from now? Do not round intermediate calculations. Round your answer to the nearest cent
Ferrell Inc. recently reported net income of $8 million. It has540,000 shares of common stock, which currently trades at $21 a share. Ferrell continuesto expand and anticipates that 1 year from now its net income will be $13.2million. Over the next year, it also anticipates issuing an additional 81,000 shares ofstock so that 1 year from now it will have 621,000 shares of common stock. AssumingFerrell’s price/earnings ratio remains at its current level, what will be its stock price1 year from now?
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Pleasant Place Plc is planning to obtain a stock market listing by offering 30% of its existing shares to the public. No new shares will be issued.Its most recent summarized results are as follows;Turnover GHC 120 mEarnings GHC 1,500mNumber of shares in issue 6 millionThe company is highly geared and has a dividend policy of 50% pay-out rate. And the retention policy is expected to achieve 10% dividend growth each year.Summarized details of two listed companies in the same industry as Pleasant Place are as follows; ICGC Ltd PCI ltdGearing (Total debt/ Equity) 45% 10%Equity Beta 1.60 1.10The current Treasury bill yield is 22% per annum. The average market return is estimated to be 27%.The shares will be offered to the public at a price 20% lower than the estimated market valuation in order to increase the prospects of success for the public issue.a. What will be the issue price?…

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