constraints A firm has $750,000 in paid-in capital, retained earnings of $38,000 (including the current year's earnings), and 25,000 shares of common st g. In the current year, it has $28,000 of earnings available for the common stockholders. s the most the firm can pay in cash dividends to each common stockholder? (Assume that legal capital includes all paid-in capital.) effect would a cash dividend of $0.96 per share have on the firm's balance sheet entries? m cannot raise any new funds from external sources, what do you consider the key constraint with respect to the magnitude of the firm's dividend paymen capital is assumed to include all paid-in capital, the most the firm can pay in cash dividends to each common stockholder is $ (Round to the nearest o

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
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Dividend constraints A firm has $750,000 in paid-in capital, retained earnings of $38,000 (including the current year's earnings), and 25,000 shares of common stock
outstanding. In the current year, it has $28,000 of earnings available for the common stockholders.
ions
a. What is the most the firm can pay in cash dividends to each common stockholder? (Assume that legal capital includes all paid-in capital.)
b. What effect would a cash dividend of $0.96 per share have on the firm's balance sheet entries?
c. If the firm cannot raise any new funds from external sources, what do you consider the key constraint with respect to the magnitude of the firm's dividend payments?
a If legal capital is assumed to include all paid-in capital, the most the firm can pay in cash dividends to each common stockholder is $
(Round to the nearest cent.)
Eriter your answer im the ainswer box and then click Check Answer.
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Transcribed Image Text:He Dividend constraints A firm has $750,000 in paid-in capital, retained earnings of $38,000 (including the current year's earnings), and 25,000 shares of common stock outstanding. In the current year, it has $28,000 of earnings available for the common stockholders. ions a. What is the most the firm can pay in cash dividends to each common stockholder? (Assume that legal capital includes all paid-in capital.) b. What effect would a cash dividend of $0.96 per share have on the firm's balance sheet entries? c. If the firm cannot raise any new funds from external sources, what do you consider the key constraint with respect to the magnitude of the firm's dividend payments? a If legal capital is assumed to include all paid-in capital, the most the firm can pay in cash dividends to each common stockholder is $ (Round to the nearest cent.) Eriter your answer im the ainswer box and then click Check Answer. parts remaining Clear All Check Answer 10:38 pe here to search 5/8/2
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