Corporate Finance: A Focused Approach (mindtap Course List)
7th Edition
ISBN: 9781337909747
Author: Michael C. Ehrhardt, Eugene F. Brigham
Publisher: South-Western College Pub
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 2, Problem 3Q
Summary Introduction
To discuss: Whether company should pay a $20 million as a cash dividend, when it reports $20 million as
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
If a “typical” firm reports $20 million of retained earnings on its balancesheet, can the firm definitely pay a $20 million cash dividend?
If a typical firm reports $20 million of retained earnings on its balance sheet, could its directors declare a $20 million cash dividend without any qualms? Explain why or why not.
Suppose a firm is paying dividend of $500000 out of net income of $2 million. What is the firm's payout ratio?
Chapter 2 Solutions
Corporate Finance: A Focused Approach (mindtap Course List)
Ch. 2 - Prob. 1QCh. 2 - Prob. 2QCh. 2 - Prob. 3QCh. 2 - Prob. 4QCh. 2 - Prob. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 1PCh. 2 - Prob. 2P
Ch. 2 - Hollys Art Galleries recently reported 7.9 million...Ch. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Zucker Inc. recently reported 4 million in...Ch. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - Prob. 12PCh. 2 - Prob. 13PCh. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - Rhodes Corporations financial statements are shown...Ch. 2 - The Bookbinder Company had 500,000 cumulative...Ch. 2 - Jenny Cochran, a graduate of the University of...Ch. 2 - Prob. 2MCCh. 2 - Prob. 3MCCh. 2 - Prob. 4MCCh. 2 - Prob. 5MCCh. 2 - Prob. 6MCCh. 2 - Prob. 7MCCh. 2 - Prob. 8MCCh. 2 - Prob. 9MCCh. 2 - Prob. 10MCCh. 2 - Prob. 12MC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- 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).arrow_forwardA firm has a market value equal to its book value. Currently, the firm has excess cash of $7,000 and other assets of $21,000. Equity is worth $28,000. The firm has 600 shares of stock outstanding and net income of $2,400. What will the stock price per share be if the fim pays out Its excess cash as a cash dividend?arrow_forwardA firm has a market value equal to its book value. Currently, the firm has excess cash of $11,500 and other assets of $28,500. Equity is worth $40,000. The firm has 950 shares of stock outstanding and net income of $3,800. What will the stock price per share be if the firm pays out its excess cash as a cash dividend?arrow_forward
- A firm has a market value equal to its book value. Currently, the firm has excess cash of $500 and other assets of $8,000. Equity is worth $8,500. The firm has 850 shares of stock outstanding and net income of $1,200. What will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase?arrow_forwardSuppose a firm pays total dividends of $35,000 out of net income of $200,000. What would the firm's payout ratio be?arrow_forwardSuppose that the principal of a synthetic CDO is $125 million. The equity, mezzanine, and senior principals are $10 million, $25 million, and $90 million respectively. Which tranche(s) is responsible for payouts of $7 million due to defaults by companies in the portfolio? Which tranche(s) is responsible if those payments rise to $14 million?arrow_forward
- A Company has adopted a policy whereby it will seek any additional external financing as well as internal financing. Given this, what is the maximum growth rate for the firm if it has net income of $32,600, total assets of $503,000, total equity of $326,000, and a 25 percent dividend payout ratio?arrow_forwardCalculate the enterprise value of a firm with a market capitalization (market value of equity) of $66 Billion, market value of debt of $22 Billion, and $1 Billion in cash and equivalents. [Note: Enter your answer in Billions; for example, if you calculate the enterprise value to be $100 Billion, then enter just 100 in the answer box.]arrow_forwardYou are given the following information: Stockholders' equity as reported on the firm’s balance sheet = $5.75 billion, price/earnings ratio = 9.5, common shares outstanding = 20 million, and market/book ratio = 2.3. The firm's market value of total debt is $5 billion; the firm has cash and equivalents totaling $300 million; and the firm's EBITDA equals $3 billion. What is the price of a share of the company's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. $ What is the firm's EV/EBITDA? Do not round intermediate calculations. Round your answer to two decimal places.arrow_forward
- A firm has a market value equal to its book value. Currently, the firm has excess cash of $7,000 and other assets of $21,000 Equity is worth $28,000. The firm has 600 shares of stock outstanding and net income of $2,400. What will the stock price per share be if the firm pays out its excess cash as a cash dividend? Multiple Choicea). $64b). $43c). $35d). $39e). $60arrow_forwardOn their books, Boston Enterprises has $3.4 billion in paid-in capital and $1.8 billion in retained earnings. What is the maximum amount that Boston Enterprises could consider paying in dividends to stockholders, assuming they have the cash on hand? Select answer from the options below $1.6 billion $3.4 billion $1.8 billion $5.2 billionarrow_forwardYou are given the following information: Stockholders’equity as reported on the firm’s balance sheet = $6.5 billion, price-earnings ratio = 9, commonshares outstanding = 180 million, and market/book ratio = 2.0. The firm’s marketvalue of total debt is $7 billion, the firm has cash and equivalents totaling $250 million, andthe firm’s EBITDA equals $2 billion. What is the price of a share of the company’s commonstock? What is the firm’s EV/EBITDA?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
What Are Stock Buybacks and Why Are They Controversial?; Author: TD Ameritrade;https://www.youtube.com/watch?v=2O4bmcliaog;License: Standard youtube license