The Digital Systems Company was organized two years ago to take advantage of an Internet opportunity. Investors paid $12 a share for 2 million shares with a $4 par value. In the next two years, the company had earnings of $2 million and $3 million, respectively. It paid dividends of 1.2 million and $1.3 million respectively, in those years. At the end of the first year, Digital sold another 500,000 shares of stock at $14 per share. Construct the equity section of Digital balance sheet initially and at the end of its first and second years in business.
The Digital Systems Company was organized two years ago to take advantage of an Internet opportunity. Investors paid $12 a share for 2 million shares with a $4 par value. In the next two years, the company had earnings of $2 million and $3 million, respectively. It paid dividends of 1.2 million and $1.3 million respectively, in those years. At the end of the first year, Digital sold another 500,000 shares of stock at $14 per share. Construct the equity section of Digital balance sheet initially and at the end of its first and second years in business.
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
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The Digital Systems Company was organized two years ago to take advantage of an Internet opportunity. Investors paid $12 a share for 2 million shares with a $4 par value. In the next two years, the company had earnings of $2 million and $3 million, respectively. It paid dividends of 1.2 million and $1.3 million respectively, in those years. At the end of the first year, Digital sold another 500,000 shares of stock at $14 per share. Construct the equity section of Digital
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