a. What will be the price per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the total value of the stock held by new investors? (Enter your answers in whole dollars, notin millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) c. What will be the wealth of the existing investors including the dividend payment? (Enter your answers in whole dollars, not in millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
a. What will be the price per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the total value of the stock held by new investors? (Enter your answers in whole dollars, notin millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) c. What will be the wealth of the existing investors including the dividend payment? (Enter your answers in whole dollars, not in millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Please answer in Excel showing work.
Transcribed Image Text:Hewlard Pocket's market value balance sheet is given.
Assets
Liabilities and Shareholders' Equity
A. Original balance sheet
$ 150,000
950,000 Equity
$ 1,100, 000 Value of firm
Cash
Debt
Other assets
Value of firm
1,100,000
$1,100,000
Shares outstanding = 100, 000
Price per share = $1,100, 000 / 100,000 = $11
Pocket needs to hold on to $88,000 of cash for a future investment. Nevertheless, it decides to pay a cash dividend of $2.50 per
share and to replace cash as needed with a new issue of shares. After the dividend is paid and the new stock is issued:
a. What will be the price per share? (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
b. What will be the total value of the stock held by new investors? (Enter
your answers in whole dollars, not in millions. Do not round
intermediate calculations. Round your answer to the nearest whole
dollar amount.)
c. What will be the wealth of the existing investors including the dividend
payment? (Enter your answers in whole dollars, not in millions. Do
not round intermediate calculations. Round your answer to the
nearest whole dollar amount.)
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