Dividend payments * In 2017, Entergy paid a regular quarterly dividend of $.89 per share. a. Match each of the following dates. ( AI ) Friday, October 27 (BI) Record date (A2) Tuesday, November 7 (B2) Payment date (A3) Wednesday, November 8 (B3) Ex-dividend date (A4) Thursday, November 9 (B4) Last with-dividend date (A5) Friday, December 1 (B5) Declaration date b. On one of these dates, the stock price fell by about $.89. Which date? Why? c. Entergy’s stock price in November 2017 was about $86. What was the dividend yield? d. Entergy’s forecasted earnings per share for 2017 were about $6.90. What was the payout ratio? e. Suppose that Entergy paid a 10% stock dividend. What would happen to the stock price?

Question

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Answer 1

Textbook Question

Chapter 16, Problem 1PS

Dividend payments* In 2017, Entergy paid a regular quarterly dividend of $.89 per share.

a. Match each of the following dates.

(AI) Friday, October 27	(BI) Record date
(A2) Tuesday, November 7	(B2) Payment date
(A3) Wednesday, November 8	(B3) Ex-dividend date
(A4) Thursday, November 9	(B4) Last with-dividend date
(A5) Friday, December 1	(B5) Declaration date

b. On one of these dates, the stock price fell by about $.89. Which date? Why?
c. Entergy’s stock price in November 2017 was about $86. What was the dividend yield?
d. Entergy’s forecasted earnings per share for 2017 were about $6.90. What was the payout ratio?
e. Suppose that Entergy paid a 10% stock dividend. What would happen to the stock price?

a)

Expert Solution

Summary Introduction

To determine: The appropriate events in respective dates.

Explanation of Solution

Following are the appropriates matched with respective events:

Date	Event
Friday, October 27	Declaration date
Tuesday, November 7	Last with-dividend date
Wednesday, November 8	Ex-dividend date
Thursday, November 9	Record date
Friday, December 1	Payment date

b)

Expert Solution

Summary Introduction

To determine: The date at which the stock price is fell by $0.89 and the reason.

Explanation of Solution

The date is on November 8^th and it was the ex-dividend date, the fall in price due to the buyers of the stock on the ex-dividend date are not included in the company’s books prior to the record date and therefore they are not entitled to get the dividend and the price is fall by approximately the dividend amount.

c)

Expert Solution

Summary Introduction

To determine: The dividend yield of the company E.

Dividend yield is the ratio between a firm’s yearly dividend to its share price and it is denoted as percentage.

Explanation of Solution

Dividend yield = Annual dividendStock price=($0.89×4)$86=$3.56$86=0.0414 or 4.14%.

Therefore, the dividend yield of company E is 4.14%.

d)

Expert Solution

Summary Introduction

To determine: The payout ratio of the company E.

Payout ratio is the ratio which shows the amount of dividend that a firm gives out to its shareholders from its current earnings.

Explanation of Solution

Payout ratio = Annual dividendAnnual earnings=($0.89×4)$6.90=$3.56$6.90=0.516 or 51.6%.

Therefore, the payout ratio of the company E is 51.16%.

e)

Expert Solution

Summary Introduction

To determine: The impact on stock price if the company E paid a 10% stock dividend.

Explanation of Solution

If the stock dividend is increased the number of shares outstanding without changing the market value of the firm, hence, the value per share will decline.

Expected stock price = Current price(1+dividend payout ratio)=$861.10=$78.18

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Answer 2

Textbook Question

Chapter 16, Problem 1PS

Dividend payments* In 2017, Entergy paid a regular quarterly dividend of $.89 per share.

a. Match each of the following dates.

(AI) Friday, October 27	(BI) Record date
(A2) Tuesday, November 7	(B2) Payment date
(A3) Wednesday, November 8	(B3) Ex-dividend date
(A4) Thursday, November 9	(B4) Last with-dividend date
(A5) Friday, December 1	(B5) Declaration date

b. On one of these dates, the stock price fell by about $.89. Which date? Why?
c. Entergy’s stock price in November 2017 was about $86. What was the dividend yield?
d. Entergy’s forecasted earnings per share for 2017 were about $6.90. What was the payout ratio?
e. Suppose that Entergy paid a 10% stock dividend. What would happen to the stock price?

a)

Expert Solution

Summary Introduction

To determine: The appropriate events in respective dates.

Explanation of Solution

Following are the appropriates matched with respective events:

Date	Event
Friday, October 27	Declaration date
Tuesday, November 7	Last with-dividend date
Wednesday, November 8	Ex-dividend date
Thursday, November 9	Record date
Friday, December 1	Payment date

b)

Expert Solution

Summary Introduction

To determine: The date at which the stock price is fell by $0.89 and the reason.

Explanation of Solution

The date is on November 8^th and it was the ex-dividend date, the fall in price due to the buyers of the stock on the ex-dividend date are not included in the company’s books prior to the record date and therefore they are not entitled to get the dividend and the price is fall by approximately the dividend amount.

c)

Expert Solution

Summary Introduction

To determine: The dividend yield of the company E.

Dividend yield is the ratio between a firm’s yearly dividend to its share price and it is denoted as percentage.

Explanation of Solution

Dividend yield = Annual dividendStock price=($0.89×4)$86=$3.56$86=0.0414 or 4.14%.

Therefore, the dividend yield of company E is 4.14%.

d)

Expert Solution

Summary Introduction

To determine: The payout ratio of the company E.

Payout ratio is the ratio which shows the amount of dividend that a firm gives out to its shareholders from its current earnings.

Explanation of Solution

Payout ratio = Annual dividendAnnual earnings=($0.89×4)$6.90=$3.56$6.90=0.516 or 51.6%.

Therefore, the payout ratio of the company E is 51.16%.

e)

Expert Solution

Summary Introduction

To determine: The impact on stock price if the company E paid a 10% stock dividend.

Explanation of Solution

If the stock dividend is increased the number of shares outstanding without changing the market value of the firm, hence, the value per share will decline.

Expected stock price = Current price(1+dividend payout ratio)=$861.10=$78.18

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Answer 3

Textbook Question

Chapter 16, Problem 1PS

Dividend payments* In 2017, Entergy paid a regular quarterly dividend of $.89 per share.

a. Match each of the following dates.

(AI) Friday, October 27	(BI) Record date
(A2) Tuesday, November 7	(B2) Payment date
(A3) Wednesday, November 8	(B3) Ex-dividend date
(A4) Thursday, November 9	(B4) Last with-dividend date
(A5) Friday, December 1	(B5) Declaration date

b. On one of these dates, the stock price fell by about $.89. Which date? Why?
c. Entergy’s stock price in November 2017 was about $86. What was the dividend yield?
d. Entergy’s forecasted earnings per share for 2017 were about $6.90. What was the payout ratio?
e. Suppose that Entergy paid a 10% stock dividend. What would happen to the stock price?

a)

Expert Solution

Summary Introduction

To determine: The appropriate events in respective dates.

Explanation of Solution

Following are the appropriates matched with respective events:

Date	Event
Friday, October 27	Declaration date
Tuesday, November 7	Last with-dividend date
Wednesday, November 8	Ex-dividend date
Thursday, November 9	Record date
Friday, December 1	Payment date

b)

Expert Solution

Summary Introduction

To determine: The date at which the stock price is fell by $0.89 and the reason.

Explanation of Solution

The date is on November 8^th and it was the ex-dividend date, the fall in price due to the buyers of the stock on the ex-dividend date are not included in the company’s books prior to the record date and therefore they are not entitled to get the dividend and the price is fall by approximately the dividend amount.

c)

Expert Solution

Summary Introduction

To determine: The dividend yield of the company E.

Dividend yield is the ratio between a firm’s yearly dividend to its share price and it is denoted as percentage.

Explanation of Solution

Dividend yield = Annual dividendStock price=($0.89×4)$86=$3.56$86=0.0414 or 4.14%.

Therefore, the dividend yield of company E is 4.14%.

d)

Expert Solution

Summary Introduction

To determine: The payout ratio of the company E.

Payout ratio is the ratio which shows the amount of dividend that a firm gives out to its shareholders from its current earnings.

Explanation of Solution

Payout ratio = Annual dividendAnnual earnings=($0.89×4)$6.90=$3.56$6.90=0.516 or 51.6%.

Therefore, the payout ratio of the company E is 51.16%.

e)

Expert Solution

Summary Introduction

To determine: The impact on stock price if the company E paid a 10% stock dividend.

Explanation of Solution

If the stock dividend is increased the number of shares outstanding without changing the market value of the firm, hence, the value per share will decline.

Expected stock price = Current price(1+dividend payout ratio)=$861.10=$78.18

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Answer 4

Textbook Question

Chapter 16, Problem 1PS

Dividend payments* In 2017, Entergy paid a regular quarterly dividend of $.89 per share.

a. Match each of the following dates.

(AI) Friday, October 27	(BI) Record date
(A2) Tuesday, November 7	(B2) Payment date
(A3) Wednesday, November 8	(B3) Ex-dividend date
(A4) Thursday, November 9	(B4) Last with-dividend date
(A5) Friday, December 1	(B5) Declaration date

b. On one of these dates, the stock price fell by about $.89. Which date? Why?
c. Entergy’s stock price in November 2017 was about $86. What was the dividend yield?
d. Entergy’s forecasted earnings per share for 2017 were about $6.90. What was the payout ratio?
e. Suppose that Entergy paid a 10% stock dividend. What would happen to the stock price?

a)

Expert Solution

Summary Introduction

To determine: The appropriate events in respective dates.

Explanation of Solution

Following are the appropriates matched with respective events:

Date	Event
Friday, October 27	Declaration date
Tuesday, November 7	Last with-dividend date
Wednesday, November 8	Ex-dividend date
Thursday, November 9	Record date
Friday, December 1	Payment date

b)

Expert Solution

Summary Introduction

To determine: The date at which the stock price is fell by $0.89 and the reason.

Explanation of Solution

The date is on November 8^th and it was the ex-dividend date, the fall in price due to the buyers of the stock on the ex-dividend date are not included in the company’s books prior to the record date and therefore they are not entitled to get the dividend and the price is fall by approximately the dividend amount.

c)

Expert Solution

Summary Introduction

To determine: The dividend yield of the company E.

Dividend yield is the ratio between a firm’s yearly dividend to its share price and it is denoted as percentage.

Explanation of Solution

Dividend yield = Annual dividendStock price=($0.89×4)$86=$3.56$86=0.0414 or 4.14%.

Therefore, the dividend yield of company E is 4.14%.

d)

Expert Solution

Summary Introduction

To determine: The payout ratio of the company E.

Payout ratio is the ratio which shows the amount of dividend that a firm gives out to its shareholders from its current earnings.

Explanation of Solution

Payout ratio = Annual dividendAnnual earnings=($0.89×4)$6.90=$3.56$6.90=0.516 or 51.6%.

Therefore, the payout ratio of the company E is 51.16%.

e)

Expert Solution

Summary Introduction

To determine: The impact on stock price if the company E paid a 10% stock dividend.

Explanation of Solution

If the stock dividend is increased the number of shares outstanding without changing the market value of the firm, hence, the value per share will decline.

Expected stock price = Current price(1+dividend payout ratio)=$861.10=$78.18

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

a)

Expert Solution

Summary Introduction

To determine: The appropriate events in respective dates.

Explanation of Solution

Following are the appropriates matched with respective events:

Date	Event
Friday, October 27	Declaration date
Tuesday, November 7	Last with-dividend date
Wednesday, November 8	Ex-dividend date
Thursday, November 9	Record date
Friday, December 1	Payment date

b)

Expert Solution

Summary Introduction

To determine: The date at which the stock price is fell by $0.89 and the reason.

Explanation of Solution

The date is on November 8^th and it was the ex-dividend date, the fall in price due to the buyers of the stock on the ex-dividend date are not included in the company’s books prior to the record date and therefore they are not entitled to get the dividend and the price is fall by approximately the dividend amount.

c)

Expert Solution

Summary Introduction

To determine: The dividend yield of the company E.

Dividend yield is the ratio between a firm’s yearly dividend to its share price and it is denoted as percentage.

Explanation of Solution

Dividend yield = Annual dividendStock price=($0.89×4)$86=$3.56$86=0.0414 or 4.14%.

Therefore, the dividend yield of company E is 4.14%.

d)

Expert Solution

Summary Introduction

To determine: The payout ratio of the company E.

Payout ratio is the ratio which shows the amount of dividend that a firm gives out to its shareholders from its current earnings.

Explanation of Solution

Payout ratio = Annual dividendAnnual earnings=($0.89×4)$6.90=$3.56$6.90=0.516 or 51.6%.

Therefore, the payout ratio of the company E is 51.16%.

e)

Expert Solution

Summary Introduction

To determine: The impact on stock price if the company E paid a 10% stock dividend.

Explanation of Solution

If the stock dividend is increased the number of shares outstanding without changing the market value of the firm, hence, the value per share will decline.

Expected stock price = Current price(1+dividend payout ratio)=$861.10=$78.18

Answer 8

a)

Expert Solution

Summary Introduction

To determine: The appropriate events in respective dates.

Explanation of Solution

Following are the appropriates matched with respective events:

Date	Event
Friday, October 27	Declaration date
Tuesday, November 7	Last with-dividend date
Wednesday, November 8	Ex-dividend date
Thursday, November 9	Record date
Friday, December 1	Payment date

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Summary Introduction

To determine: The appropriate events in respective dates.

Answer 13

Explanation of Solution

Following are the appropriates matched with respective events:

Date	Event
Friday, October 27	Declaration date
Tuesday, November 7	Last with-dividend date
Wednesday, November 8	Ex-dividend date
Thursday, November 9	Record date
Friday, December 1	Payment date

Answer 14

b)

Expert Solution

Summary Introduction

To determine: The date at which the stock price is fell by $0.89 and the reason.

Explanation of Solution

The date is on November 8^th and it was the ex-dividend date, the fall in price due to the buyers of the stock on the ex-dividend date are not included in the company’s books prior to the record date and therefore they are not entitled to get the dividend and the price is fall by approximately the dividend amount.

Answer 15

b)

Expert Solution

Answer 16

b)

Expert Solution

Answer 17

Expert Solution

Answer 18

Summary Introduction

To determine: The date at which the stock price is fell by $0.89 and the reason.

Answer 19

Explanation of Solution

The date is on November 8^th and it was the ex-dividend date, the fall in price due to the buyers of the stock on the ex-dividend date are not included in the company’s books prior to the record date and therefore they are not entitled to get the dividend and the price is fall by approximately the dividend amount.

Answer 20

c)

Expert Solution

Summary Introduction

To determine: The dividend yield of the company E.

Dividend yield is the ratio between a firm’s yearly dividend to its share price and it is denoted as percentage.

Explanation of Solution

Dividend yield = Annual dividendStock price=($0.89×4)$86=$3.56$86=0.0414 or 4.14%.

Therefore, the dividend yield of company E is 4.14%.

Answer 21

c)

Expert Solution

Answer 22

c)

Expert Solution

Answer 23

Expert Solution

Answer 24

Summary Introduction

To determine: The dividend yield of the company E.

Dividend yield is the ratio between a firm’s yearly dividend to its share price and it is denoted as percentage.

Answer 25

Explanation of Solution

Dividend yield = Annual dividendStock price=($0.89×4)$86=$3.56$86=0.0414 or 4.14%.

Therefore, the dividend yield of company E is 4.14%.

Answer 26

d)

Expert Solution

Summary Introduction

To determine: The payout ratio of the company E.

Payout ratio is the ratio which shows the amount of dividend that a firm gives out to its shareholders from its current earnings.

Explanation of Solution

Payout ratio = Annual dividendAnnual earnings=($0.89×4)$6.90=$3.56$6.90=0.516 or 51.6%.

Therefore, the payout ratio of the company E is 51.16%.

Answer 27

d)

Expert Solution

Answer 28

d)

Expert Solution

Answer 29

Expert Solution

Answer 30

Summary Introduction

To determine: The payout ratio of the company E.

Payout ratio is the ratio which shows the amount of dividend that a firm gives out to its shareholders from its current earnings.

Answer 31

Explanation of Solution

Payout ratio = Annual dividendAnnual earnings=($0.89×4)$6.90=$3.56$6.90=0.516 or 51.6%.

Therefore, the payout ratio of the company E is 51.16%.

Answer 32

e)

Expert Solution

Summary Introduction

To determine: The impact on stock price if the company E paid a 10% stock dividend.

Explanation of Solution

If the stock dividend is increased the number of shares outstanding without changing the market value of the firm, hence, the value per share will decline.

Expected stock price = Current price(1+dividend payout ratio)=$861.10=$78.18

Answer 33

e)

Expert Solution

Answer 34

e)

Expert Solution

Answer 35

Expert Solution

Answer 36

Summary Introduction

To determine: The impact on stock price if the company E paid a 10% stock dividend.

Answer 37

Explanation of Solution

If the stock dividend is increased the number of shares outstanding without changing the market value of the firm, hence, the value per share will decline.

Expected stock price = Current price(1+dividend payout ratio)=$861.10=$78.18