Exam 19: Dividends and Other Payouts

A firm has a market value equal to its book value. Currently,the firm has excess cash of $1,000 and other assets of $6,000. Equity is worth $18,000. The firm has 700 shares of stock outstanding and net income of $1,200. What will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase?

Ignoring capital gains as an alternative,the tax law changes in 2003 tend to favor a:

A firm has a market value equal to its book value. Currently,the firm has excess cash of $500 and other assets of $9,500. Equity is worth $10,000. The firm has 250 shares of stock outstanding and net income of $1,400. What will the stock price per share be if the firm pays out its excess cash as a cash dividend?

A cash payment made by a firm to its owners when some of the firm's assets are sold off is called a:

The difference between the highest and lowest prices at which a stock has traded is called its:

Michael's Boating Supplies has 150,000 shares of stock outstanding with a par value of $1 per share and a market value of $10 a share. The company has retained earnings of $76,500 and capital in excess of par of $340,000. The company just announced a 1-for-5 reverse stock split. How many shares of stock will be outstanding after the split?

It has been shown that in the absence of taxes and other market imperfections firm value will be unaffected by dividend policy. Explain the logic behind this conclusion. Next,describe three real-world factors that may cause one dividend policy to be preferable to another.

The use of homemade dividends allows stockholders to change the:

Leslie purchased 100 shares of GT,Inc. stock on Wednesday,June 7^th. Marti purchased 100 shares of GT,Inc. stock on Thursday,July 8^th. GT declared a dividend on June 20^th to shareholders of record on July 12^th and payable on August 1^st. Which one of the following statements concerning the dividend paid on August 1^st is correct given this information?

Samuel's has 7,000 shares of stock outstanding with a par value of $1.00 per share and a market value of $12 per share. The balance sheet shows $7,000 in the common stock account,$58,000 in the capital in excess of par account and $32,500 in the retained earnings account. The firm just announced a 50% (large) stock dividend. What is the value of the common stock account after the dividend?