skip to Main Content
The smarter way
to do assignments.

Please note that this is just a preview of a school assignment posted on our website by one of our clients. If you need assistance with this question too, please click on the Order button at the bottom of the page to get started.

Chapter 14
Warm-up exercise questions

E14-1
Stephanie’s Cafes, inc., has declared a dividend of $1.30 per share for shareholders of record on Tuesday, May 2. The firm has 200,000 shares outstanding and will pay the dividend on May24. How much cash will be needed to pay the dividend? When will the stock begin selling ex dividend?

E14- 2
Chancellor Industries has retained earnings available of $1.2 million. The firm plans to make two investments require financing of $950,000 and $1.75 million, respectively. Chancellor uses a target capital structure with 60% debt and 40% equity. Apply the residual theory to determine what dividends, if any, can be paid out and calculate the resulting dividend payout ratio.

E14-3
Ashkenazi Companies has the following stockholders’ equity account:

Common stock (350,000 shares at $3 par)————$1,050,000
Paid-in capital in excess of par ————————–2,500,000
Retaining earnings——————————————-750,000
Total stockholders’ equity————————–$4,300,000

Assuming that state laws define legal capital solely as the par value of common stock, how much of a per-share dividend can Ashkenazi pay? If legal capital were more broadly defined to include all paid-in capital, how much of a per-share dividend could Ashkenazi pay?

E14-4
The board of Kopi Industries is considering a new dividend policy that would set dividends at 60% of earnings. The recent past has witnessed earnings per share (EPS) and dividends paid per share as follows:

Year EPS Dividend/ share
2009
2010
2011
2012 $1.75
1.95
2.05
2.25 $0.95
1.20
1.35
1.30

Based on Kopi’s historical dividend payout ratio, discuss whether a constant payout ratio of 60% would benefit shareholders.

E14-5
The current stockholders’ equity account for Hilo Farms is as follows:

Common stock (50,000 shares at $3 par)—————$150,000
Paid-in capital in excess of par —————————-250,000
Retained earnings——————————————–450,000
Total stockholders’ equity—————————–$850,000

Hilo has announced plans to issue an additional 5,000 shares of common stocks as part of its stock dividend plan. The current market price of Hilo’s common stock is $20 per share. Show how the proposed stock dividend would affect the stockholder’s equity account

GET HELP WITH THIS ASSIGNMENT TODAY

Clicking on this button will take you to our custom assignment page. Here you can fill out all the additional details for this particular paper (grading rubric, academic style, number of sources etc), after which your paper will get assigned to a course-specific writer. If you have any issues/concerns, please don’t hesitate to contact our live support team or email us right away.

How It Works        |        About Us       |       Contact Us

© 2018 | Intelli Essays Homework Service®