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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Question
Chapter 14, Problem 14.18P
a)
Summary Introduction
To determine: The number of outstanding shares the company has in the year 2019.
Introduction:
Dividend is the portion of earnings of the company distributed to the shareholders of the firm.
b)
Summary Introduction
To determine: The number of shares repurchase.
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Suppose you are conducting an analysis of the financial performance of Blue Hamster Manufacturing Inc. over the past three years.
The company did not issue new shares during these three years and has faced some operational difficulties. The company has thus pilot tested some new forecasting strategies for better operations management. You have collected the company’s relevant financial data, made reasonable assumptions based on the information available, and calculated the following ratios.
Ratios Calculated
Year 1
Year 2
Year 3
Price-to-cash-flow
6.40
8.32
9.32
Inventory turnover
12.80
15.36
17.20
Debt-to-equity
0.20
0.21
0.25
Based on the preceding information, your calculations, and your assumptions, which of the following statements can be included in your analysis report? Check all that apply.
A. The company’s creditworthiness has improved over these three years as evidenced by the increase in its debt-to-equity ratio over time.
B. Blue…
Stardom Manufacturing Company (SMC) is in the construction industry for many years. Recently, the issue of financing has been raised since the company is concerned about additional financing of the company and the sources of funding. A recent audit of the company’s financial position has indicated the following details:
The company has acquired a bond at face value with an interest rate of 10%.
The can issue new Preference shares at $7.50 per share and offer dividend of $75 per share.
The ordinary shares of Stardom has a market value of $60 per share and the firm is expecting to pay dividend of $4.50 per share one year later with anticipated growth rate of dividend of 6%.
The company’s tax rate is 40%.
TASK 1: using the above information help the financial controller to calculate:
The cost of Debt financing after tax.
The cost of Ordinary Share financing.
The cost of Preference Shares financing.
TASK 2: Using information above, what is the weighted average cost of…
Stardom Manufacturing Company (SMC) is in the construction industry for many years. Recently, the issue of financing has been raised since the company is concerned about additional financing of the company and the sources of funding. A recent audit of the company’s financial position has indicated the following details:
The company has acquired a bond at face value with an interest rate of 10%.
The can issue new Preference shares at $7.50 per share and offer dividend of $75 per share.
The ordinary shares of Stardom has a market value of $60 per share and the firm is expecting to pay dividend of $4.50 per share one year later with anticipated growth rate of dividend of 6%.
The company’s tax rate is 40%.
TASK 1: using the above information help the financial controller to calculate:
The cost of Debt financing after tax.
The cost of Ordinary Share financing.
The cost of Preference Shares financing.
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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