57.
ABC Corp. is expected to pay a dividend of $5.00 per year indefinitely. If the appropriate
rate of return on this stock is 5 percent per year, and the stock consistently goes ex–
dividend 45 days before dividend payment date, what will be the expected minimum price
in light of the dividend payment logistics?
58.
ABC Corp. is expected to pay a dividend of $5.00 per year indefinitely. If the appropriate
rate of return on this stock is 5 percent per year, and the stock consistently goes ex–
dividend 45 days before dividend payment date, what will be the expected maximum price
in light of the dividend payment logistics?
59.
Suppose that a firm always announces a yearly dividend at the end of the first quarter of
the year, but then pays the dividend out as four equal quarterly payments. If the next such
“annual” dividend has been announced as $5, it is exactly one quarter until the first
quarterly dividend from that $5, the effective annual required rate of return on the
company’s stock is 14 percent, and all future “annual” dividends are expected to grow at 4
percent per year indefinitely, how much will this stock be worth?
60.
Suppose that a firm always announces a yearly dividend at the end of the first quarter of
the year, but then pays the dividend out as four equal quarterly payments. If the next such
“annual” dividend has been announced as $2, it is exactly one quarter until the first
quarterly dividend from that $2, the effective annual required rate of return on the
company’s stock is 15 percent, and all future “annual” dividends are expected to grow at
10 percent per year indefinitely, how much will this stock be worth?
61.
Suppose that a firm always announces a yearly dividend at the end of the first quarter of
the year, but then pays the dividend out as four equal quarterly payments. If the next such
“annual” dividend has been announced as $1, it is exactly one quarter until the first
quarterly dividend from that $1, the effective annual required rate of return on the
company’s stock is 10 percent, and all future “annual” dividends are expected to grow at 5
percent per year indefinitely, how much will this stock be worth?
62.
Suppose a firm pays total dividends of $750,000 out of net income of $2 million. What
would the firm’s retention ratio be?
63.
Suppose a firm pays total dividends of $489,000 out of net income of $5 million. What
would the firm’s retention ratio be?
64.
Suppose a firm pays total dividends of $125,000 out of net income of $500,000. What
would the firm’s retention ratio be?
65.
Suppose a firm has a dividend payout ratio of 25 percent and net income of $5 million.
What would be the annual addition to retained earnings?
66.
Suppose a firm has a dividend payout ratio of 65 percent and net income of $5 million.
What would be the annual addition to retained earnings?
67.
Suppose a firm has a retention ratio of 55 percent and net income of $7 million. How much
does it pay out in dividends?
68.
Suppose a firm has a dividend payout ratio of 47 percent and net income of $7 million.
What would be the annual addition to retained earnings?
69.
Suppose a firm has a retention ratio of 33 percent and net income of $6.25 million. How
much does it pay out in dividends?
70.
Suppose a firm has a dividend payout ratio of 42 percent and net income of $9.25 million.
What would be the annual addition to retained earnings?
71.
A firm has retained earnings of $11 million, a common shares account of $2 million, and
additional paid-in-capital of $6 million, and the firm just paid a 5 percent stock dividend.
Assume that fair market value is reflected in the relative size of both the common shares
account and the additional paid–in-capital account. Which of the following statements is
correct?
72.
A firm has retained earnings of $11 million, a common shares account of $2 million, and
additional paid-in-capital of $6 million, and the firm just paid a 15 percent stock dividend.
Assume that fair market value is reflected in the relative size of both the common shares
account and the additional paid–in-capital account. Which of the following statements is
correct?
73.
A firm has retained earnings of $6 million, a common shares account of $3 million, and
additional paid-in-capital of $6 million, and the firm just paid a 10 percent stock dividend.
Assume that fair market value is reflected in the relative size of both the common shares
account and the additional paid–in-capital account. What are the new levels in each
account?
74.
MMK Cos. normally pays an annual dividend. The last such dividend paid was $2.00, all
future dividends are expect to grow at a rate of 6 percent per year, and the firm faces a
required rate of return on equity of 13 percent. If the firm just announced that the next
dividend will be an extraordinary dividend of $22 per share that is not expected to affect
any other future dividends, what should the stock price be?
75.
GBH Inc. is planning on announcing a 5-for-2 stock split. The stock is currently trading at
$90 per share. Based on this information, what will be the new stock price?
76.
GBH Inc. is planning on announcing a 2-for-5 stock split. The stock is currently trading at
$12 per share. Based on this information, what will be the new stock price?
77.
GBH Inc. is planning on announcing a 7-for-3 stock split. The stock is currently trading at
$119 per share. Based on this information, what will be the new stock price?
78.
Which of the following statements is correct?
79.
Which of the following statements is correct?
80.
Which of the following is a reason for a firm to announce a stock split?