The balance sheet for Tempest, Inc., Is shown here In market value terms. There are 27,000 shares of stock outstanding. Market Value Balance Sheet $ 117,000 489,960 Equity Cash Fixed assets $606,960 Total $606,960 Total $606,960 The company has declared a dividend of $1.40 per share. The stock goes ex dividend tomorrow. Ignore any tax effects. a. What is the stock selling for today? (Do not round Intermedlate calculatlons and round your answer to 2 decimal places, e.g., 32.16.) b. What will It sell for tomorrow? (Do not round Intermedlate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Stock price today b. Stock price tomorrow c. What will the balance sheet look like after the dividends are pald? (Do not round Intermedlate calculatlons and round your answers to the nearest whole number, e.g., 32.) Cash Fixed assets Equity Total Total

The balance sheet for Tempest, Inc., Is shown here In market value terms. There are 27,000 shares of stock outstanding. Market Value Balance Sheet $ 117,000 489,960 Equity Cash Fixed assets $606,960 Total $606,960 Total $606,960 The company has declared a dividend of $1.40 per share. The stock goes ex dividend tomorrow. Ignore any tax effects. a. What is the stock selling for today? (Do not round Intermedlate calculatlons and round your answer to 2 decimal places, e.g., 32.16.) b. What will It sell for tomorrow? (Do not round Intermedlate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Stock price today b. Stock price tomorrow c. What will the balance sheet look like after the dividends are pald? (Do not round Intermedlate calculatlons and round your answers to the nearest whole number, e.g., 32.) Cash Fixed assets Equity Total Total

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

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Question 1: Suppose you own 100 shares of General Motors stock, and the company earned $6 per share during the last reporting period. Suppose also that GM could either pay all of its earnings out as dividends (in which case you would receive $600) or retain the earnings in the business, buy more assets, and cause the price of the stock to increase by $6 per share (in which case the value of your stock would rise by $600). a. How would the tax laws influence what you, as a typical stockholder, would want the company to do? b. Would your choice be influenced by how much other income you had? Why might the desires of a 35-year-old doctor differ with respect to corporate dividend policy from the desires of a retiree living on a small income? c. How might the corporation’s decision with regard to the dividends it pays influence the price of its stock?
The Carlton Corporation has $4 million in earnings after taxes and 2 million shares outstanding. The stock trades at a P/E of 30. The firm has $1 million in excess cash. a. Compute the current price of the stock. (Do not round intermediate calculations and round your answer to 2 decimal places.) b. If the $1 million is used to pay dividends, how much will dividends per share be? (Do not round intermediate calculations and round your answer to 2 decimal places.)
The balance sheet for Quinn Corporation is shown here in market value terms. There are 10,000 shares of stock outstanding. Market Value Balance Sheet $ Cash Equity 44,200 $ 404,200 Fixed assets 360,000 $ $ Total Total 404,200 404,200 The company has declared a dividend of $1.90 per share. The stock goes ex dividend tomorrow. Ignoring any tax effects, what is the stock selling for today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Stock price per share
The balance sheet for Quinn Corporation is shown here in market value terms. There are 9,000 shares of stock outstanding. Market Value Balance Sheet Cash $ 44,600 Equity $ 444,600 Fixed assets 400,000 Total $ 444,600 Total $ 444,600 The company has declared a dividend of $1.50 per share. The stock goes ex dividend tomorrow. Ignoring any tax effects, what is the stock selling for today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Ignoring any tax effects, what will it sell for tomorrow? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
S Suppose Wacken, Limited just issued a dividend of $2.61 per share on its common stock. The company paid dividends of $2.11, $2.18, $2.35, and $2.45 per share in the last four years. If the stock currently sells for $80, what is your best estimate of the company's cost of equity capital using arithmetic and geometric growth rates? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Cost of equity using arithmetic growth rate Cost of equity using geometric growth rate % %
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Circuit City Stores (CC) recently paid a $.16 dividend. The dividend is expected to grow at a 23 percent rate. At the current stock price of $7.96, what is the return shareholders are expecting?
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Anle Corporation has a current stock price of $19.49 and is expected to pay a dividend of $1.25 in one year. Its expected stock price right after paying that dividend is $21.26. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain?

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