The stock holders’ equity Introduction: The amount of value given to the business by the shareholders as capital plus earnings and after the exclusion of dividend is termed as stockholders equity.

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Chapter 14, Problem 14.5WUE

Summary Introduction

To determine: The stock holders’ equity

Introduction:

The amount of value given to the business by the shareholders as capital plus earnings and after the exclusion of dividend is termed as stockholders equity.

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Assume that the following statements of financial position are stated and a book value. Alpha Corporation Current Assets $15,000 Current Liabilities $5,400 Net Fixed Assets 39,000 Long-Term Debt 10,100   Equity 38,500     $54,000   $54,000 Beta Corporation Current Assets $3,600 Current Liabilities $1,400 Net Fixed Assets 6,700 Long-Term Debt 2,100     Equity 6,800   $10,300   $10,300 Suppose the fair market value of Beta’s fixed assets is $9,500 rather than the $6,700 book value shown. Alpha pays $17,300 for Beta and raises the needed funds through an issue of long-term debt. Construct the post-merger statement of financial position now, assuming that the purchase method of accounting is used.

The shareholders of Barley Corporation have voted in favor of a buyout offer from Wheat Corporation. Information about each firm is given here: Barley Wheat Price/earnings ratio 13.5 21 Shares outstanding 90,000 210,000 Earnings $180,000 $810,000 Barley shareholders will receive one share of Wheat stock for every three shares they hold of Barley. Required What will the EPS of Wheat be after the merger? What will be the P/E ratio if the NPV of the acquisition is 0? What must Wheat feel is the value of the synergy between these two firms? Explain how your answer can be reconciled with the decision to go ahead with the takeover?

Black Oil Company is trying to decide whether to lease or buy a new computer-assisted drilling system for its extraction business. Management has already determined that acquisition of the system has a positive NPV. The system costs $9.4 million and qualifies for a 25% CCA rate. The equipment will have a $975,000 salvage value in five years. Black Oil’s tax rate is 36%, and the firm can borrow at 9%. Cape Town Company has offered to lease the drilling equipment to Black Oil for payments of $2.15 million per year. Cape Town’s policy is to require its lessees to make payments at the start of the year. Suppose it is estimated that the equipment will have no savage value at the end of the lease. What is the maximum lease payment acceptable to Black Oil now?

Answer 2

Question

Chapter 14, Problem 14.5WUE

Summary Introduction

To determine: The stock holders’ equity

Introduction:

The amount of value given to the business by the shareholders as capital plus earnings and after the exclusion of dividend is termed as stockholders equity.

Expert Solution & Answer

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Answer 3

Question

Chapter 14, Problem 14.5WUE

Summary Introduction

To determine: The stock holders’ equity

Introduction:

The amount of value given to the business by the shareholders as capital plus earnings and after the exclusion of dividend is termed as stockholders equity.

Expert Solution & Answer

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Answer 4

Question

Chapter 14, Problem 14.5WUE

Summary Introduction

To determine: The stock holders’ equity

Introduction:

The amount of value given to the business by the shareholders as capital plus earnings and after the exclusion of dividend is termed as stockholders equity.

Expert Solution & Answer

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Answer 5

Chapter 14, Problem 14.5WUE

Summary Introduction

To determine: The stock holders’ equity

Introduction:

The amount of value given to the business by the shareholders as capital plus earnings and after the exclusion of dividend is termed as stockholders equity.

Answer 6

Chapter 14, Problem 14.5WUE

Summary Introduction

To determine: The stock holders’ equity

Introduction:

The amount of value given to the business by the shareholders as capital plus earnings and after the exclusion of dividend is termed as stockholders equity.

Answer 7

Chapter 14, Problem 14.5WUE

Summary Introduction

To determine: The stock holders’ equity

Introduction:

The amount of value given to the business by the shareholders as capital plus earnings and after the exclusion of dividend is termed as stockholders equity.

Answer 8

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Answer 9

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Answer 10

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Answer 11

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. 1FOP Ch. 14.2 - Prob. 14.4RQ Ch. 14.2 - Prob. 14.5RQ Ch. 14.2 - Prob. 14.6RQ Ch. 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

The stock holders’ equity Introduction: The amount of value given to the business by the shareholders as capital plus earnings and after the exclusion of dividend is termed as stockholders equity.

Solution Summary: The author explains that the amount of value given to the business by shareholders as capital plus earnings and after the exclusion of dividend is termed stockholders' equity.

Concept explainers

Videos

To determine: The stock holders’ equity

Introduction:

The amount of value given to the business by the shareholders as capital plus earnings and after the exclusion of dividend is termed as stockholders equity.

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Chapter 14 Solutions

The stock holders’ equity Introduction: The amount of value given to the business by the shareholders as capital plus earnings and after the exclusion of dividend is termed as stockholders equity.

Solution Summary: The author explains that the amount of value given to the business by shareholders as capital plus earnings and after the exclusion of dividend is termed stockholders' equity.

Concept explainers

Videos

To determine: The stock holders’ equity Introduction: The amount of value given to the business by the shareholders as capital plus earnings and after the exclusion of dividend is termed as stockholders equity.

Want to see the full answer?

Chapter 14 Solutions

To determine: The stock holders’ equity

Introduction:

The amount of value given to the business by the shareholders as capital plus earnings and after the exclusion of dividend is termed as stockholders equity.