Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
14th Edition
ISBN: 9780133507690
Author: Lawrence J. Gitman, Chad J. Zutter
Publisher: PEARSON
Question
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Chapter 14, Problem 14.16P

a)

Summary Introduction

To discuss: The effects of equity accounts and per share data of a 20% stock dividend.

Introduction:

A company divides its share into multiple shares and issues to the shareholders as an additional share as per the decisions by the management is termed as stock split.

b)

Summary Introduction

To discuss: The effects of equity accounts and per share data of a 5-4 stock split.

Introduction:

A company divides its share into multiple shares and issues to the shareholders as an additional share as per the decisions by the management is termed as stock split.

c)

Summary Introduction

To discuss: The best option which accomplish W Company’s goal of reducing the stock price when maintaining the stable level of retained earnings.

d)

Summary Introduction

To discuss: The legal constraint which might encourage the firm to take the stock split over stock dividend.

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Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes): Income Statement Balance Sheet Sales Costs $ 40,000 Assets 34,160 $26,000 Debt Equity $ 7,000 19,000 Net income $ 5,840 Total $26,000 Total $26,000 The company has predicted a sales increase of 20 percent. Assume Yoo pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) Pro forma income statement Sales Costs $ 48000 40992 Assets $ 31200 Pro forma balance sheet Debt 7000 Equity 19000 Net income $ 7008 Total $ 31200 Total 30304 What is the external financing needed? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.) External financing needed $ 896
An insurance company has liabilities of £7 million due in 10 years' time and £9 million due in 17 years' time. The assets of the company consist of two zero-coupon bonds, one paying £X million in 7 years' time and the other paying £Y million in 20 years' time. The current interest rate is 6% per annum effective. Find the nominal value of X (i.e. the amount, IN MILLIONS, that bond X pays in 7 year's time) such that the first two conditions for Redington's theory of immunisation are satisfied. Express your answer to THREE DECIMAL PLACES.

Chapter 14 Solutions

Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)

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