Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Textbook Question
Chapter 7, Problem 7.3P
Learning Goal 2
P7-3 Preferred dividends In each case in the following table, how many dollars of preferred dividends per share must be paid to preferred stockholders in the current period before common stock dividends are paid?
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Preferred dividends In each case in the following table,, how many dollars of preferred dividends
per share must be paid to preferred stockholders before common stock dividends are paid?
The amount of preferred dividends that must be paid in Case A before common dividends are paid is
$. (Round to the nearest cent.)
Data table
(Click on the icon here in order to copy the contents of the data table below into
a spreadsheet.)
Case
A
B
C
D
E
Type
Cumulative
Noncumulative
Noncumulative
Cumulative
Cumulative
Par value
$70
$140
$90
$130
$110
Dividend per
share per period
$4.20
4.5%
$3.60
2.5%
7.5%
Periods of
dividends passed
3
2
5
0
4
X
Preferred dividends In each case in the following table,
how many dollars of preferred dividends per share must be paid to preferred stockholders before common stock dividends are paid?
The amount of preferred dividends that must be paid in Case A before common dividends are paid is $ . (Round to the nearest cent.)
Data Table
(Click on the icon located on the top-right corner of the data table below in order to copy
its contents into a spreadsheet.)
Dividend per
HTT
Periods of
Case
Туре
Par value share per period dividends passed
$70
$80
$130
$110
$60
A
Cumulative
$8.40
2
В
Noncumulative
6.0%
6.
Noncumulative
$3.25
Cumulative
1.5%
E
Cumulative
7.5%
4
Print
Done
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A company reports the following:
Net income
Preferred dividends
Average stockholders' equity
Average common stockholders' equity
Round percentages to one decimal place.
a. Determine the return on stockholders' equity.
%
$199,450
14,770
1,293,540
860,050
b. Determine the return on common stockholders' equity.
%
Chapter 7 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 7.1 - What are the key differences between debt and...Ch. 7.2 - What risks do common stockholders take that other...Ch. 7.2 - Prob. 7.3RQCh. 7.2 - Explain the relationships among authorized shares,...Ch. 7.2 - Prob. 7.5RQCh. 7.2 - Prob. 7.6RQCh. 7.2 - Explain the cumulative feature of preferred stock....Ch. 7.3 - Describe the events that occur in an efficient...Ch. 7.3 - Prob. 7.9RQCh. 7.3 - Describe, compare, and contrast the following...
Ch. 7.3 - Describe the free cash flow valuation model, and...Ch. 7.3 - Explain each of the three other approaches to...Ch. 7.4 - Prob. 7.13RQCh. 7.4 - Assuming that all other variables remain...Ch. 7 - Prob. 7.1STPCh. 7 - Learning Goal 5 ST7-2 Free cash flow valuation...Ch. 7 - Prob. 7.1WUECh. 7 - Prob. 7.2WUECh. 7 - Prob. 7.3WUECh. 7 - Prob. 7.4WUECh. 7 - Prob. 7.5WUECh. 7 - Prob. 7.6WUECh. 7 - Authorized and available shares Aspin...Ch. 7 - Preferred dividends Acura Labs Inc. has an...Ch. 7 - Learning Goal 2 P7-3 Preferred dividends In each...Ch. 7 - Learning Goal 2 P7-4 Convertible preferred stock...Ch. 7 - Learning Goal 4 P7-5 Preferred stock valuation TXS...Ch. 7 - Prob. 7.6PCh. 7 - Preferred stock valuation Jones Design wishes to...Ch. 7 - Learning Goal 4 P7-8 Common stock value: Constant...Ch. 7 - Common stock value: Constant growth McCracken...Ch. 7 - Learning Goal 4 P7- 11 Common stock value:...Ch. 7 - Prob. 7.12PCh. 7 - Prob. 7.13PCh. 7 - Learning Goal 4 P7-14 Common stock value: Variable...Ch. 7 - Prob. 7.15PCh. 7 - Prob. 7.16PCh. 7 - Learning Goal 5 P7-17 Free cash flow valuation...Ch. 7 - Prob. 7.20PCh. 7 - Prob. 7.21PCh. 7 - Prob. 7.22PCh. 7 - Prob. 7.23PCh. 7 - Integrative: Risk and valuation Hamlin Steel...Ch. 7 - Prob. 7.25P
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- How to calculate return on common stockholders equity with $0 dividendsarrow_forwardJolie Foster Care Homes Incorporated shows the following data: Net Income $ 130,000 143,000 207,000 Total Assets $ 2,330,000 2,050,000 2,740,000 200,000 2,160,000 Year 20X1 20X2 20X3 20X4 a-1. Compute the ratio of net income to total assets for each year. Note: Input your answers as a percent rounded to 2 decimal places. Year 20X1 20X2 20X3 20X4 Return on Assets % % % Stockholders' Equity $ 1,795,000 1,587,000 1,790,000 1,620,000 % Total Debt $ 535,000 463,000 950,000 540,000arrow_forwardration has outstanding 9,600 shares of $100 par value, 6% preferred stock and 57,000 shares of $10 par value common stock. The preferred stock was issued in January 2020, and no dividends were declared in 2020 or 2021. In 2022, Oriole declares a cash dividend of $307,000. (a) Assume that the preferred are noncumulative. How much dividend will the preferred stockholders receive? Preferred stockholders would receive 2$ How much dividend will the common stockholders receive? Common stockholders would receive 24 (b) Assume that the preferred are cumulative. How much dividend will the preferred stockholders receive? 10:37F 77°F Type here to searcharrow_forward
- K Using the data in the table to the right, calculate the return for investing in the stock from January 1 to December 31. Prices are after the dividend has been paid. Return for the entire period is%. (Round to two decimal places.) Date Jan 1 Feb 5 May 14 Aug 13 Nov 12 Dec 31 Price $32.07 $29.54 $31.52 $30.69 $31.38 $41.26 ACCOR Dividend $0.21 $0.21 $0.22 $0.19arrow_forwardwhich one is correct answer please confirm? QUESTION 20 The record date in the normal dividend payment procedure is ____. a. the same day as the ex-dividend date b. the same day as the declaration date c. one day prior to the payment date d. the date when the firm makes a list from its stock transfer books of shareholders eligible to receive the dividendarrow_forwardQuestion content area top Part 1 (Preferred stock valuation) What is the value of a preferred stock where the dividend rate is 13 percent on a $100 par value, and the market's required yield on similar shares is 9 percent? Question content area bottom Part 1 The value of the preferred stock is $enter your response here per share. (Round to the nearest cent.)arrow_forward
- At what payout percentage is a stock dividend typically considered a stock split, in accordance with the recommendation of the Financial Accounting Standards Board? a. 15% b. 33% c. 25% d. 10%arrow_forwardDividends on Preferred and Common Stock Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: 20Y1, $36,000; 20Y2, $72,000; 20Y3, $162,000; 20Y4, $207,000; 20Y5, $261,000; and 20Y6, $315,000. During the entire period ended December 31 of each year, the outstanding stock of the company was composed of 30,000 shares of cumulative, preferred 3% stock, $100 par, and 100,000 shares of common stock, $10 par. Required: 1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of 20Y1. Summarize the data in tabular form. If reguired, round your per share answers to two decimal places. If the amount is zero, please enter "0". Preferred Dividends Common Dividends Total Dividends Year Total Per Share Total Per Share 20Y1 $36,000 3,600 X 1.2 V 0. 24 1.2 X 20Y2 72,000 72,000…arrow_forwardA company reports the following: Determine (a) the return on stockholders equity and (b) the return on common stockholders equity. Round percentages to one decimal place.arrow_forward
- Select one of the four stocks listed in Question 3 by entering the companys ticker symbol on the financial website you have chosen. On the screen you should see the interactive chart. Select the six-month time period and select the SP 500, so the stocks performance will be compared to the SP 500s performance on the graph. Has the stock outperformed or underperformed the overall market during this time period?arrow_forwardInvestors are more concerned with future dividends than historical dividends, so go to ESTIMATES and scroll down to the Consensus Estimates on the screen. Click on the Available Measures menu to toggle between earnings per share and dividends per share. How do analysts expect Apple's payout policy to behave in the future?arrow_forwardQuestion content area top Part 1 (Related to Checkpoint 10.3) (Preferred stock valuation) Calculate the value of a preferred stock that pays a dividend of $2.50 per share when the market's required yield on similar shares is 12 percent. Question content area bottom Part 1 The value of the preferred stock is $enter your response here per share. (Round to the nearest cent.)arrow_forward
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