Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Textbook Question
Chapter 14, Problem 14.12P
Stock dividend: Investor Security Data Company has outstanding 50,000 shares of common stock currently selling at $40 per share. The firm most recently had earnings available for common stockholders of $120,000, but it has decided to retain these funds and is considering either a 5% or a 10% stock dividend in lieu of a cash dividend.
- a. Determine the firm’s current earnings per share.
- b. If Sam Waller currently owns 500 shares of the firm’s stock, determine his proportion of ownership currently and under each of the proposed stock dividend plans. Explain your findings.
- c. Calculate and explain the market price per share under each of the stock dividend plans.
- d. For each of the proposed stock dividends, calculate the earnings per share after payment of the stock dividend.
- e. What is the value of Sam’s holdings under each of the plans? Explain.
- f. Should Sam have any preference with respect to the proposed stock dividends? Why or why not?
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Please answer the following questions that has ____________
The Weston Company's balance sheet has the following capital section. Weston's stock is currently selling for $5 per share.
Common Stock (50,000 shares at $1 par) $50,000
Capital in Excess of Par 50,000
Retained Earnings 100,000
$200,000
The firm plans to declare a 2 for 1 stock split. Show the relevant section of the Balance sheet after this.
Common Stock (______ ) shares at $_________ par) $_________
Capital in Excess of Par _________
Retained Earnings __________
Total…
The owners’ equity accounts for Vulcano International are shown below.a. If the company’s stock currently sells for $42 per share and a 10 percent stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change.b. If the company declared a 25 percent stock dividend, how would the accounts change?
Input Area:
Common stock
$20,000
Par value
$0.50
Capital surplus
$210,000
Retained earnings
$587,300
Total owners' equity
$817,300
Stock price
$42
Stock dividend
10%
Stock dividend
25%
(Use cells A6 to B13 from the given information to complete this question.)
Output Area:
New shares outstanding
New shares issued
-
Capital surplus on new shares
Common stock
Capital surplus
Retained earnings
Total owners' equity
New shares…
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Stock dividendInvestor Personal Finance Problem Security Data Company has outstanding 40,000 shares of common stock currently selling at $35 per share.
The firm most recently had earnings available for common stockholders of $118,000, but it has decided to retain these funds and is considering a 20% stock dividend in
se Options lieu of a cash dividend.
a. Determine the firm's current earnings per share.
b. If Sam Waller currently owns 700 shares of the firm's stock, determine his proportion of ownership currently and under the proposed 20% stock dividend plan.
C. Calculate the market price per share under the 20% stock dividend plan.
d. For the proposed 20% stock dividend plan, calculate the eamings per share after payment of the stock dividend.
e. What is the value of Sam's holdings under the 20% stock dividend plan?
f. Should Sam have any preference with respect to the proposed stock dividend?
ar
a. The firm's current earnings per share is $
(Round to the nearest cent.)
b. If…
Chapter 14 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
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. 14.4RQCh. 14.2 - Prob. 14.5RQCh. 14.2 - What benefit is available to participants in a...Ch. 14.3 - Does following the residual theory of dividends...Ch. 14.3 - Contrast the basic arguments about dividend policy...Ch. 14.4 - Prob. 14.9RQCh. 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 - Low-regular-and-extra dividend policy Bennett Farm...Ch. 14 - Alternative dividend policies Over the past 10...Ch. 14 - Alternative dividend policies Given the earnings...Ch. 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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