Ace Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years, but is currently contemplating some kind of dividend. The capital accounts for the firm are as follows: Common stock ( 2 , 4 0 0 , 0 0 0 shares at $ 5 par ) $ 1 2 , 0 0 0 , 0 0 0 Capital in excess of par * 5 , 0 0 0 , 0 0 0 Retained earnings 2 4 , 0 0 0 , 0 0 0 Net worth $ 4 1 , 0 0 0 , 0 0 0 * The increase in capital in excess of par as a result of a stock dividend is equal to the new shares created times ( Market price - Par value ) . The company's stock is selling for $ 2 0 per share. The company had total earnings of $ 4 , 8 0 0 , 0 0 0 during the year. With 2 , 4 0 0 , 0 0 0 shares outstanding, earnings per share were S 2 . The firm has a P / E ratio of 1 0 . What adjustments would have to be made to the capital accounts for a 1 0 percent stock dividend? Show the new capital accounts. Note: Do not round intermediate calculations. Input your answers in dollars, not millions ( e . g . $ 1 , 2 3 0 , 0 0 0 ) . What adjustments would be made to EPS and the stock price? ( Assume the P / E ratio remains constant. ) Note: Do not round intermediate calculations and round your answers to 2 decimal places. How many shares would an investor end up with if he or she originally had 9 0 shares? Note: Do not round intermediate calculations and round your answer to the nearest whole share. What is the investor's total investment worth before and after the stock dividend if the P / E ratio remains constant? Note: Do not round intermediate calculations and round your answers to the nearest whole dollar.
Ace Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years, but is currently contemplating some kind of dividend. The capital accounts for the firm are as follows: Common stock ( 2 , 4 0 0 , 0 0 0 shares at $ 5 par ) $ 1 2 , 0 0 0 , 0 0 0 Capital in excess of par * 5 , 0 0 0 , 0 0 0 Retained earnings 2 4 , 0 0 0 , 0 0 0 Net worth $ 4 1 , 0 0 0 , 0 0 0 * The increase in capital in excess of par as a result of a stock dividend is equal to the new shares created times ( Market price - Par value ) . The company's stock is selling for $ 2 0 per share. The company had total earnings of $ 4 , 8 0 0 , 0 0 0 during the year. With 2 , 4 0 0 , 0 0 0 shares outstanding, earnings per share were S 2 . The firm has a P / E ratio of 1 0 . What adjustments would have to be made to the capital accounts for a 1 0 percent stock dividend? Show the new capital accounts. Note: Do not round intermediate calculations. Input your answers in dollars, not millions ( e . g . $ 1 , 2 3 0 , 0 0 0 ) . What adjustments would be made to EPS and the stock price? ( Assume the P / E ratio remains constant. ) Note: Do not round intermediate calculations and round your answers to 2 decimal places. How many shares would an investor end up with if he or she originally had 9 0 shares? Note: Do not round intermediate calculations and round your answer to the nearest whole share. What is the investor's total investment worth before and after the stock dividend if the P / E ratio remains constant? Note: Do not round intermediate calculations and round your answers to the nearest whole dollar.
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
Ace Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years, but is currently contemplating some kind of dividend. The capital accounts for the firm are as follows: Common stock
(
2
,
4
0
0
,
0
0
0
shares at $
5
par
)
$
1
2
,
0
0
0
,
0
0
0
Capital in excess of par
*
5
,
0
0
0
,
0
0
0
Retained earnings
2
4
,
0
0
0
,
0
0
0
Net worth $
4
1
,
0
0
0
,
0
0
0
*
The increase in capital in excess of par as a result of a stock dividend is equal to the new shares created times
(
Market price
-
Par value
)
.
The company's stock is selling for $
2
0
per share. The company had total earnings of $
4
,
8
0
0
,
0
0
0
during the year. With
2
,
4
0
0
,
0
0
0
shares outstanding, earnings per share were S
2
.
The firm has a P
/
E ratio of
1
0
.
What adjustments would have to be made to the capital accounts for a
1
0
percent stock dividend? Show the new capital accounts. Note: Do not round intermediate calculations. Input your answers in dollars, not millions
(
e
.
g
.
$
1
,
2
3
0
,
0
0
0
)
.
What adjustments would be made to EPS and the stock price?
(
Assume the P
/
E ratio remains constant.
)
Note: Do not round intermediate calculations and round your answers to
2
decimal places. How many shares would an investor end up with if he or she originally had
9
0
shares? Note: Do not round intermediate calculations and round your answer to the nearest whole share. What is the investor's total investment worth before and after the stock dividend if the P
/
E ratio remains constant? Note: Do not round intermediate calculations and round your answers to the nearest whole dollar.
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