The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently selling for $4 per share. Common stock (60,000 shares at $1 par) Capital in excess of par Retained earnings Total equity $ 60,000 60,000 180,000 $300,000 The firm intends to first declare a 5 percent stock dividend and then pay a 20-cent cash dividend (which also causes a reduction of retained earnings). Show the capital section of the balance sheet after the first transaction and then after the second transaction. (Do not round Intermediate calculations and round your answers to the nearest whole dollar.) Western Pipe Co.
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- The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be $.50 per share, and there are 20,000 shares of stock outstanding. The market-value balance sheet for Payout is shown in the following table. Assets Liabilities & Equity Cash$100,000 Fixed assets900,000 Equity$1,000,000 Total $1,000,000 Total$1,000,000 Required:(a.) What price is Payout stock selling for today?(b.) What price will it sell for tomorrow? Ignore taxes.(c.) Suppose that instead of paying a dividend, Payout Corp. announces that it will repurchase stock with a market value of $10,000. What happens to the stock price when the repurchase proposal is announced?(d.) Suppose that the stock is repurchased immediately after the announcement. What would be the stock price after the repurchase?The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be $.50 per share, and there are 20,000 shares of stock outstanding. The market-value balance sheet for Payout is shown in the following table. Liabilities & Equity Assets $100,000 Cash Fixed $1,000,000 $1,000,000 assets 900,000 Equity Total $1,000,000 Total Required: (a.) (b.) (c.) What price is Payout stock selling for today? What price will it sell for tomorrow? Ignore taxes. Suppose that instead of paying a dividend, Payout Corp. announces that it will repurchase stock with a market value of $10,000. What happens to the stock price when the repurchase proposal is announced? Suppose that the stock is repurchased immediately after the announcement. What would be the stock price after the repurchase? (d.)Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,300 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,300 worth of stock. Ignore taxes. Assets Liabilities and Equity Cash $ 8,000 Debt $ 11,500 Fixed assets 29,500 Equity 26,000 a. What will be the subsequent price per share if the firm pays a dividend? b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.) c. If total earnings of the firm are $32,300 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.) d. If total earnings of the firm are $32,300 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are $32,300 a year,…
- The following financial information is available on Raytheon Technologies: Current per share market price: $225.00 Current (t = 0) per share dividend: $28.00 Expected long-term growth rate: 8.50% Raytheon Technologies can issue new common stock to net the company $205.00 per share. Determine the cost of external equity capital using the dividend capitalization model approach. 22.16% 20.94% 23.32% 22.00%A company plans to raise additional capital by issuing new shares of preferred stock, which has a current value of $40 per share. If the company pays a $2.50 dividend, what should be the cost to issue new shares if the company will incur flotation costs of 6%? O 6.6% O 6.25% O 12.6% O 12%Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,300 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,300 worth of stock. Ignore taxes. Assets Liabilities and Equity Cash $ 8,000 Debt $ 11,500 Fixed assets 29,500 Equity 26,000 a. What will be the subsequent price per share if the firm pays a dividend? b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.) c. If total earnings of the firm are $32,300 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.) d. If total earnings of the firm are $32,300 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are $32,300 a year,…
- Matilda Industries pays a dividend of $2.50 per share and is expected to pay this amount indefinitely. If Matilda's equity cost of capital is 12%, which of the following would be expected to be closest to Matilda's stock price? A. $12.50 B. $16.66 C. $20.83 D. $26.04The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be $1 per share, and there are 25,000 shares of stock outstanding. The market-value balance sheet for Payout is shown below. Liabilities and Equity $1, 000, 000 Assets Cash Fixed assets $150, 000 Equity 850, 000 Suppose that Payout changes its mind and decides to issue a 5% stock dividend instead of either issuing the cash dividend or repurchasing 5% of the outstanding stock. How would this action affect a shareholder who owns 160 shares of stock? (Round your answers to the nearest dollar.) Total value of the position Compare the effects of the repurchase to the effects of the cash dividend. The value of the position is (Click to select) v under the cash dividend. Compare the effects of the repurchase to the effects of repurchasing 5% of the outstanding stock. The value of the position is: (Click to select) v under the repurchase. .......................Jimmy Shoes Inc. has 10,000 shares outstanding with a stock price of $40 per share. The current weighted average cost of capital is 7%. It also carries long-term debt of $200,000 at an interest rate of 7% p.a. One of the agenda items in its AGM is to switch to a D/E of 1. Based on this information, answer the following questions All computations must be done and shown in detail : a) What will be the number of outstanding shares for Jimmy Shoes Inc. if it switches to a D/E ratio of 1? (Hint: Current Debt = $200,000, current equity = 10,000 shares x $40 = $400,000, current D/E = 2/4 = 0.5/1. If the firm seeks to increase its D/E to 1, it can think of borrowing more) b) What is the level of EBIT at which shareholders will be indifferent between the two capital structures, the one with a D/E = 0.5/1 and the other with a D/E of 1?
- Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,260 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,260 worth of stock. Ignore taxes. Liabilities and Assets Equity $ 7,200 Fixed assets 29,300 Debt $11,300 25,200 Cash Equity a. What will be the subsequent price per share if the firm pays a dividend? b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.) c. If total earnings of the firm are $25,500 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.) d. If total earnings of the firm are $25,500 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are $25,500 a year, find the price-earnings ratio if the…Tucker’s National Distributing has a current market value of equityof $10,665. Currently, the firm has excess cash of $640, total assetsof $22,400, net income of $3,210, and 500 shares of stock outstanding.Tucker’s is going to use all of its excess cash to repurchase sharesof stock. What will the stock price per share be after the stockrepurchase is completed?Jimmy Shoes Inc. has 10,000 shares outstanding with a stock price of $40 per share. The current weighted average cost of capital is 7%. It also carries long-term debt of $200,000 at an interest rate of 7% p.a. One of the agenda items in its AGM is to switch to a D/E of 1. Based on this information,answer the following questions: a) What will be the number of outstanding shares for Jimmy Shoes Inc. if it switches to a D/E ratio of 1? (Hint: Current Debt = $200,000, current equity = 10,000 shares x $40 = $400,000, current D/E = 2/4 = 0.5/1. If the firm seeks to increase its D/E to 1, it can think ofborrowing more)b) What is the level of EBIT at which shareholders will be indifferent between the two capital structures, the one with a D/E = 0.5/1 and the other with a D/E of 1?