Stock is currently selling for $100. What will be the impact on the stock’s price if the company: (a) pays a $2.35 cash dividend, (b) splits the stock four for one, (c) splits the stock one for two, and (d) distributes a 10 percent stock dividend?

Stock is currently selling for $100. What will be the impact on the stock’s price if the company: (a) pays a $2.35 cash dividend, (b) splits the stock four for one, (c) splits the stock one for two, and (d) distributes a 10 percent stock dividend?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 21MC

See similar textbooks

Related questions

Q: A stock is selling today for $60 per share. At the end of the year, it pays a dividend of $3 per…

A: The dividend is the interest paid to shareholders on outstanding shares.

Q: A stock is selling today for $75 per share. At the end of the year, it pays a dividend of $6 per…

A: Answer and calculations are given below

Q: a. What will be the number of shares that you hold after the stock dividend is paid? (Do not round…

A: The division of a company's current shares into multiple shares is referred to as a stock split. The…

Q: A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per…

A: Part a: We can determine the values by using the steps below:

Q: What is the cost of preferred stock if the annual dividend is $8.75, stock price is $12, and the…

A: The cost of preferred stock refers to the return that the company provides to their preferred…

Q: A stock is expected to paid a dividend of f $2.9 you just sold it for $218. If you bought it for…

A: A stock's return is the change in its price over a period of time, plus any dividends or other…

Q: A stock is currently selling for $60 a share. What is the percentage gain or loss on the…

A: a) It is a loss.Percentage loss16.67%b) It is a loss.Percentage loss16.67%Explanation:Step 1: A…

Q: Jersey Medical earns $9.00 a share, sells for $120, and pays a $6 per share dividend. The stock is…

A: The question is based on the concept of Security valuation

Q: Assume that you own 3,600 shares of $10 par value common stock and the company has a 4 for 1 stock…

A: Formula: Shares after Split = Number of shares holding before stock split x Split ratio.

Q: Your company has preferred stock that has an annual dividend of $3. If the current price is $25,…

A: In this question we require to compute the cost of preferred stock form the details given,

Q: Suppose that you own 3,400 shares of Nocash Corp. and the company is about to pay a 25% stock…

A: Stock Dividends: A stock dividend is a dividend paid by a corporation to its shareholders. In this…

Q: Jersey Medical earns $9.50 a share, sells for $80, and pays a $7 per share dividend. The stock is…

A: Stock split is a process in which the company divides the existing shares, thereby increasing the…

Q: A firm’s common stock has D1 = $1.50, P0 = $30.00, g = 5%, and F = 4%. If the firmmust issue new…

A: The cost of equity is the return a company requires to decide if an investment meets capital return…

Q: Suppose a stock is currently trading for $30 per share. (a) If this firm issue a 20% stock dividend,…

A: Stock dividend means a payment given to the shareholders in shares instead of a cash payment. Stock…

Q: Kendra Corporation's preferred shares are trading for $27 in the market and pay a $4.10 annual…

A: Preferred stock, often known as preferred stock, is a type of stock that pays dividends to…

Q: A stock is bought for $23.25 and sold for $28.69 a year later, immediately after it has paid a…

A: PLEASE LIKE THE ANSWER Formula = capital gain rate = (End value-Beginning value)/Beginning value *…

Q: please use Excel) Preferred stock B sells for $45 in the market and pays an annual dividend of…

A: Market price of share = $ 45 Annual dividend = $ 4.60

Q: A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per…

A: The dividend yield is the percentage ratio that tells us about how much dividend a company is paying…

Q: What is the total rate of return on the stock? b. What are the dividend yield and percentage…

A: Dividend Yield: It represents the portion of the firm's share price that pays dividends. Hence, it…

Q: Suppose that you own 2,800 shares of Nocash Corp. and the company is about to pay a 25% stock…

A: Given: Current shareholding =2,800 Stock dividend =25% Current market price =$125

Q: A stock currently pays a $3 dividend out of $9 of earnings (EPS). If earnings (EPS) are expected to…

A: Dividend is the return that a shareholder gets from investing the money in the shares of the…

Q: Jersey Medical earns $9.00 a share, sells for $100, and pays a $7 per share dividend. The stock is…

A: (A)- A stock is split two for one which implies that stock holder will get 2 shares for every 1…

Q: A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $2 per…

A: This question is asking about the dividend yield, capital gain yield, and total yield on the…

Q: Tando Airlines has preferred stock outstanding that has a par value equal to $100. Preferred…

A: Cost of preferred stock as follows: Cost of preferred stock = Dividend / Current price Cost of…

Q: Your corporation has declared a cash dividend of $5.00 per share. Before the cash dividend the stock…

A: price of share normally includes the dividend that declared

Q: A preferred stock from Duquesne Light Company (DQU-PRA) pays $2.10 in annual dividends. If the…

A: Present Value of Stock = Annual Dividend / Rate of Return

Q: Solve the problem with complete solution. 4. A stock pays an annual dividend of 80 per share. If the…

A: The Dividend yield is the percentage ratio that tells us about how much dividend a company is paying…

Q: rsey Medical earns $12.50 a share, sells for $100, and pays a so per share dividend. The stock is…

A: Company do the stock split to increase the number of shares and decrease the price of stock in the…

Q: Jersey Medical earns $10.00 a share, sells for $80, and pays a $6 per share dividend. The stock is…

A: CASE : In this case Jersey Medical earn $10 per share and pay $ 6 as dividend and have a share…

Question

Stock is currently selling for $100. What will be the impact on the stock’s price if the company:

(a) pays a $2.35 cash dividend,

(b) splits the stock four for one,

(d) distributes a 10 percent stock dividend?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step 5

Trending now

This is a popular solution!

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

What is the cost of preferred stock if the annual dividend is $8.75, stock price is $12, and the flotation cost is $3? How is the cost of preferred stock impacted if the annual dividend increases to $9? What if the annual dividend decreases to $8.50?
Your corporation has declared a cash dividend of $5.00 per share. Before the cash dividend the stock was selling for $60.00 per share. When the stock goes ex-dividend what will the price per share be? Please show your calculations in the space provided.What would the ex-dividend price per share be?
Please help
Suppose that you own 1,800 shares of Nocash Corp. and the company is about to pay a 25% stock dividend. The stock currently sells at $115 per share. a. What will be the number of shares that you hold after the stock dividend is paid? (Do not round intermediate calculations.) b. What will be the total value of your equity position after the stock dividend is paid? (Do not round intermediate calculations.) c. What will be the number of shares that you hold if the firm splits five-for-four instead of paying the stock dividend?
Jersey Medical earns $12.50 a share, sells for $100, and pays a $6 per share dividend. The stock is split two for one and a $3 per share cash dividend is declared. a. What will be the new price of the stock? Round your answer to the nearest dollar. $ b. If the firm's total earnings do not change, what is the payout ratio before and after the stock split? Round your answers to one decimal place. Payout ratio before the split: Payout ratio after the split: % %
A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells for $56. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $48. What are the dividend yield and percentage capital gain in this case? A Required What is the total rate of return for the stock? B Required What is the dividend yield and percentage capital gain? C Required Now suppose the year-end stock price after the dividend is paid is $48. What are the dividend yield and percentage capital gain in this case? (Negative amounts should be indicated by a minus sign. Enter your answers as a whole percent.)
A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $2 per share and sells for $57. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $43. What are the dividend yield and percentage capital gain in this case?
A firm’s common stock has D1 = $1.50, P0 = $30.00, g = 5%, and F = 4%. If the firmmust issue new stock, what is its cost of new external equity?
D3) Suppose a stock is currently trading for $30 per share. (a) If this firm issue a 20% stock dividend, what would its new share price be? (b) If this firm does a 5:4 stock split, what should its new share price be ?
Tando Airlines has preferred stock outstanding that has a par value equal to $100. Preferred dividend payments equal 8 percent of the stock's par value. If Tando's preferred stock currently sells for $160,, what is the rate of return that preferred stockholders earn? What portion of this return is the dividend yield and what portion is the capital gains yield? (hint: think about the growth rate that is associated with preferred stock.)
What is the answers and the working
A stock is selling today for $75 per share. At the end of the year, it pays a dividend of $6 per share and sells for $87. A. What is the total rate of return on the stock? B. What are the dividend yield and percentage capital gain? C. Now suppose the year-end stock price after the dividend is paid is $72. What are the dividend yield and percentage capital gain in this case?