Principles of Managerial Finance, Student Value Edition Plus NEW MyLab Finance with Pearson eText -- Access Card Package (14th Edition)
14th Edition
ISBN: 9780133740912
Author: Lawrence J. Gitman, Chad J. Zutter
Publisher: PEARSON
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Textbook Question
Chapter 14, Problem 14.10P
Cash versus stock dividend Milwaukee Tool has the following stockholders’ equity account. The firm’s common stock currently sells for $4 per share.
| $100,000 | |
| Common stock (400,000 shares at $1 par) | $400,000 |
| Paid-in capital in excess of par | $200,000 |
| $320,000 | |
| Total stockholders’ equity | $1,020,000 |
- a. Show the effects on the firm of a cash dividend of $0 01, $0.05, $0.10, and $0.20 per share.
- b. Show the effects on the firm of a 1%, 5%, 10%, and 20% stock dividend.
- c. Compare the effects in parts a and b. What are the significant differences between the two methods of paying dividends?
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Cash versus stock dividend Milwaukee Tool has the following stockholders' equity account. The firm's common stock currently sells for $4.14 per share.
Preferred stock
Common stock (300,000 shares at $0.93 par)
Paid-in capital in excess of par
Retained earnings
Total stockholders' equity
a. Show the effects on the firm of a cash dividend of $0.20 per share.
b. Show the effects on the firm of a 1% stock dividend.
c. Compare the effects in parts a and b. What are the significant differences between the two methods of paying dividends?
a. The balance in preferred stock after the $0.20 cash dividend is $
(Round to the nearest dollar.)
$ 99,000
279,000
184,000
390,000
$952,000
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Cash versus stock dividend Milwaukee Tool has the following stockholders' equity account. The firm's common stock currently sells for $3.85 per share.
$ 98,000
372,000
181,000
390,000
Preferred stock
se Options
Common stock (400,000 shares at $0.93 par)
Paid-in capital in excess of par
Retained earnings
ar
Total stockholders' equity
$1,041,000
a. Show the effects on the firm of a cash dividend of $0.10 per share.
b. Show the effects on the firm of a 20% stock dividend.
c. Compare the effects in parts a and b. What are the significant differences between the two methods of paying dividends?
a. The balance in preferred stock after the $0.10 cash dividend is $
(Round to the nearest dollar.)
(Round to the nearest dollar.)
The balance in common stock after the $0.10 cash dividend is $
(Round to the nearest dollar.)
The balance in paid-in capital after the $0.10 cash dividend is $
The balance in retained earnings after the $0.10 cash dividend is $1. (Round to the nearest dollar.)
Enter…
Stockholder Payout Ratios
The following information pertains to Milo Mindbender Corporation:
Net income
$123,000
Dividends per common share
$2.00
Common shares
12,000
Purchases of treasury stock
$85,000
Common share price
$20
Required:
Calculate the dividend yield, dividend payout, and total payout. (Note: Round answers to two decimal places.)
Dividend yield
fill in the blank 1
%
Dividend payout
fill in the blank 2
%
Total payout
fill in the blank 3
%
Chapter 14 Solutions
Principles of Managerial Finance, Student Value Edition Plus NEW MyLab Finance with Pearson eText -- Access Card Package (14th Edition)
Ch. 14.1 - What two ways can firms distribute cash to...Ch. 14.1 - Why do rapidly growing firms generally pay no...Ch. 14.1 - The dividend payout ratio equals dividends paid...Ch. 14.2 - Prob. 1FOPCh. 14.2 - Prob. 14.4RQCh. 14.2 - Prob. 14.5RQCh. 14.2 - Prob. 14.6RQCh. 14.3 - Does following the residual theory of dividends...Ch. 14.3 - Contrast the basic arguments about dividend policy...Ch. 14.4 - Prob. 14.9RQ
Ch. 14.5 - Describe a constant-payout-ratio dividend policy,...Ch. 14.6 - Why do firms issue stock dividends? Comment on the...Ch. 14.6 - Compare a stock split with a stock dividend.Ch. 14 - Prob. 1ORCh. 14 - Prob. 14.1STPCh. 14 - Prob. 14.1WUECh. 14 - Prob. 14.2WUECh. 14 - Prob. 14.3WUECh. 14 - Prob. 14.4WUECh. 14 - Prob. 14.5WUECh. 14 - Dividend payment procedures At the quarterly...Ch. 14 - Prob. 14.2PCh. 14 - Prob. 14.3PCh. 14 - Dividend constraints The Howe Companys...Ch. 14 - Prob. 14.5PCh. 14 - Prob. 14.6PCh. 14 - Prob. 14.7PCh. 14 - Prob. 14.8PCh. 14 - Stock dividend: Firm Columbia Paper has the...Ch. 14 - Cash versus stock dividend Milwaukee Tool has the...Ch. 14 - Stock dividend: Investor Sarah Warren currently...Ch. 14 - Stock dividend: Investor Security Data Company has...Ch. 14 - Stock split: Firm Growth Industries current...Ch. 14 - Prob. 14.14PCh. 14 - Stock split versus stock dividend: Firm Mammoth...Ch. 14 - Prob. 14.16PCh. 14 - Prob. 14.17PCh. 14 - Prob. 14.18PCh. 14 - Prob. 14.19P
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