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…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lohn Corporation is expected to pay the following dividends over the next four years: $14, $10, $9, and $4. Afterward, the company pledges to maintain a constant 3 percent growth rate in dividends forever. If the required return on the stock Is 12 percent, what is the current share price? Multiple Cholce $56.47 $58.51 $60.27 $65.40 $55.59
Panhandle Industries Inc. currently pays an annual common stock dividend of $3.20 per share. The company's dividend has grown steadily over the past 12 years from $1.60 to its present level; this growth trend is expected to continue. The company's present dividend payout ratio, also expected to continue, is 50 percent. In addition, the stock presently sells at 5 times current earnings (that is, its P/E multiple is 5). Panhandle Industries stock has a beta of 1.15, as computed by a leading investment service. The present risk-free rate is 4.0 percent, and the expected return on the stock market is 12.0 percent. Do not round intermediate calculations. Round your answers to the questions below to two decimal places. a. Suppose an individual investor feels that 11 percent is an appropriate required rate of return for the level of risk this investor perceives for Panhandle Industries. Using the dividend capitalization model and the Capital Asset Pricing Model approaches, determine whether…
XYC Corporation has 1,500,000 shares of common stock outstanding. The company directors declared a dividend of Php30,000,000 last year and the investor received Php20. What is the Php20 mentioned in the problem? a. coupon rate b. current yield c. dividend per share d. total dividend
Balling Limited is a company listed on the NZX. Balling has announced it will make a dividend payment at the end of the year of $1.75 per share. The average annual growth rate in the company’s dividends over the past five years has been 5%. Balling’s shareholders have a required rate of return of 15%p.a. Balling’s shares have been trading very consistently around $20 per share for the past few months and analysts suggest this is likely to continue for the foreseeable future. How can you explain this price based on the constant growth dividend discount model?
Atlantic Northern Inc. just reported a net income of $5,000,000, and its current stock price is $25.75 per share. Atlantic Northern is forecasting an increase of 25% for its net income next year, but it also expects it will have to issue 1,500,000 new shares of stock (raising its shares outstanding from 5,500,000 shares to 7,000,000 shares). If Atlantic Northern's forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does management expect its stock price to be one year from now? $25.18 per share O $25.75 per share O$18.88 per share $31.48 per share One year later, Atlantic Northern Inc.'s stock is trading at $43.50, and the company reports its common equity value as $35,252,000. What is Atlantic Northern Inc.'s market-to-book (M/B) ratio? 8.63x Is it possible for a company to have a negative EPS and thus a negative P/E ratio? Yes v
Cullumber Company has had 4 years of record earnings. Due to this success, the market price of its 500,000 shares of $2 par value common stock has increased from $14 per share to $53. During this period, paid-in capital remained the same at $3,000,000. Retained earnings increased from $4,500,000 to $30,000,000. 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) par value per share. (a) 1. 2. (b) Paid-in capital Stock dividend - retained earnings Retained earnings 2-for-1 stock split - retained earnings (c) Total stockholders' equity $ Shares outstanding 1. 2. $ Stock dividend - par value per share $ Original Balances 2-for-1 stock split - par value per share $ $ $ $ After Dividend $ $ After Split
Current Attempt in Progress Pharoah AG has had 4 years of net income. Due to this success, the market price of its 450,000 shares of £2 par value ordinary shares has increased from £13 per share to £49. During this period, total share capital and share premium remained the same at £2,420,000. Retained earnings increased from £1,870,000 to £12,300,000. CEO E. David is considering either a 15% share dividend or a 2-for-1 share split. He asks you to show the before-and after effects of each option on retained earnings and total equity. Original Balances Retained earnings Total equity £ £ £ £ After Dividend £ After Split
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Noto Inc. just paid a dividend of $4.6 per share. Dividends are expected to grow at 6%, 5%, and 3% for the next three years respectively. After that the dividends are expected to grow at a constant rate of 2% indefinitely. Stockholders require a return of 9 percent to invest in Noto’s common stock. Compute the value of Noto’s common stock today.
During the first quarter of 2015, Plains All American Pipeline L.P. (PAA) stock cost $50 per share and was expected to yield 5% per year in dividends, while Total SA (TOT) stock cost $50 per share and was expected to yield 6% per year in dividends.† If you invested a total of $46,000 in these stocks and expected to earn $2,450 in dividends in a year, how many shares of each stock did you purchase?
TFP Electric is a profitable utility company that has increased its dividend to common stockholders every year for 42 consecutive years. Which of the following is least likely to affect the market price of the company’s preferred stock by a significant amount? A. A decrease in long-term interest rates. B. An increase in long-term interest rates. C. The board of directors announces its intention to increase common stock dividends in the current year. D. Whether or not the preferred stock carries a conversion privilege
Kelsey Drums, Inc., is a well-established supplier of fine percussion instruments to orchestras all over the United States. The company's class A common stock has paid a dividend of $4.84 per share per year for the last 14 years. Management expects to continue to pay at that amount for the foreseeable future. Kim Arnold purchased 300 shares of Kelsey class A common 5 years ago at a time when the required rate of return for the stock was 8.3%. She wants to sell her shares today. The current required rate of return for the stock is 5.30%. How much total capital gain or loss will Kim have on her shares? 1. The value of the stock when Kim purchased it was $____per share. (Round to the nearest cent.) 2.The value of the stock if Kim sells her shares today is $_______ per share. (Round to the nearest cent.) 3. The total capital gain (or loss) Kim will have on her shares is $_______. (Round to the nearest dollar. Enter a positive number for a capital gain and a negative…

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