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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Transcribed Image Text:Question 1
A firm's legal capital is defined as the par value of its common stock.
The following table represents a scaled version of the equity account of FIRM XYZ:
Common stock at par
R
289006
Paid-in capital in excess of par
Retained earnings
503635
848429
What total value can the firm pay out as dividends without impairing its legal capital?
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