None Question 10 of 10View PoliciesShow Attempt HistoryCurrent Attempt in Progress>0/1!!!× A 10% stock dividend will increase the number of shares issued by 12800 (128000 × 10%). At a market price of $30 pershare, total paid-in capital will increase by $384000 (12800 shares × $30/share) and retained earnings will decrease by thatsame amount.Grouper Inc. has retained earnings of $509000 and total stockholders' equity of $2001000. It has 128000 shares of $8 par valuecommon stock outstanding, which is currently selling for $30 per share. What will occur if Grouper declares a 10% stock dividend onits common stock?● Retained earnings will decrease by $102400 and total stockholders' equity will increase by $102400.O Net income will decrease by $102400.Retained earnings will decrease by $384000 and total paid-in capital will increase by $384000.O Retained earnings will decrease by $384000 and total stockholders' equity will increase by $384000.

Please see answer and journal entries below for further understanding.

Answered: Question 10 of 10 View Policies Show…

Fundamentals of Financial Management (MindTap Course List)

15th Edition

ISBN:9781337395250

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 22SP

See similar textbooks

Similar questions

Question 21 As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D 0 = $0.80; P 0 = $22.50; and g L = 8.00% (constant). Based on the dividend growth model, what is the cost of common from reinvested earnings? a. 11.25% b. 10.69% c. 11.84% d. 12.43% e. 13.05% Muscarella Inc. has the following balance sheet and income statement data: Cash $ 14,000 Accounts payable $ 42,000 Receivables 70,000 Other current liabilities 28,000 Inventories 210,000 Total CL $ 70,000 Total CA $294,000 Long-term debt 70,000 Net fixed assets 126,000 Common equity 280,000 Total assets $420,000 Total liab. and equity $420,000 Sales $280,000 Net income $ 21,000 The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.70,…
Question 7 The Amelia Knight investment fund has a total capital of R120 000 invested in three shares: SharesReturnInvestedTechnological Sector25%R60 000Education Sector13%R30 000Mining Sector20%R30 000 The current risk-free rate is 5,5%. Market returns have the following estimated probability distribution for the next period: ProbabilityMarket return0,3–10%0,1 14%0,2 15%0,4 18% What is the beta coefficient of the investment fund? 1. 0,52 2. 0,80 3. 1,82 4. 4,92
Single infinite stage Michelle wants to value the stock of Gamma Corporation and gathers the following information: Current market price per share . Current book value per share $94 $46 • Perpetual return on equity 18% • Perpetual growth rate 2% • Required return on equity 12% Which a. The value of the company's according to a single stage RI model is closest to: $ Number Round your answer to the nearest cent. b. How the stock is valued on a relative basis (choose the correct one): ○ fairly valued O undervalued O overvalued
Measuring Risk Investment Expected Standard Return Deviation Treasury Bill 5% 0% Common Stock 15% 12.85% • So we observe that the publishing company stock offers a higher expected return but also entails more risk as measured by standard deviation. An investor's choice of a specific investment will be determined by their attitude toward risk.
Problem 9.16 The preferred stock of Axim Corp. is currently selling at $48.95. If the required rate of return is 11.6 percent, what is the dividend paid by this stock? (Round answer to 2 decimal places, e.g. 15.25.) Dividend paid
1. stock EPS share price Growth rate A $0.30 $4.80 4% B $0.40 $5.50 6% C $0.50 $7.50 7% D $0.60 $8.00 5% Using the PEG ratio, rank the stocks in order of investment opportunity, the first having the best, the last having the worst. A. C,B,D,A B. A,D,B,C C. C,D,B,A D. B,D,C,A 2.Which of the following not true regarding financial statement A.Group financial statement be produced by each subsidiary as well as the parent entity B.Profit must be separated between members of the parent company and that of minority interest C.Minority interest share of equity represents that ‘part of a subsidiary’s equity not allocated to members of the parent company. D.Group financial statements must be produced by the parent entity only. E.None of the options provided.
Question content area top Part 1 (Common stock valuation) Assume the following: • the investor's required rate of return is 14.5 percent, • the expected level of earnings at the end of this year (E1) is $6, • the retention ratio is 40 percent, • the return on equity (ROE) is 14 percent (that is, it can earn 14 percent on reinvested earnings), and • similar shares of stock sell at multiples of 6.742 times earnings per share. Questions: a. Determine the expected growth rate for dividends. b. Determine the price earnings ratio (P/E1). c. What is the stock price using the P/E ratio valuation method? d. What is the stock price using the dividend discount model? e. What would happen to the P/E ratio (P/E1) and stock price if the company increased its retention rate to 80 percent (holding all else constant)? What would happen to the P/E ratio (P/E1) and stock price if the company paid out all its earnings in the form of dividends?…
20 2 4 5 6 7 Input area: Insert Share Formulas A 9 Year for price 10 Year for price 11 Year for price 20 1 Dividend paid Dividend growth rate Required return 15 Output area: 16 17 18 View Help Draw Editing v Calibri (Body) 11 B ✓ ✓ Av E✓ ✓ General $50 Xfx The RLX Co. just paid a dividend of $3.20 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. If investors require a ✓ Ev ZPv Ov B | v | .. return of 10.5 percent on the company's stock, what is the current price? What will the price be in 3 years? In 15 years? Price in 0 years Price in 3 years Price in 15 years = 6 Workbook Statistics $ 13 (Use cells A6 to B11 from the given information to complete this question.) 14 Graded Worksheet JL B Data 3.20 4% 10.50% 0 3 15 Q TA Review J J E 5 HEENARDE ** F H hp & 7 === J HE K NEW L W McGraw Hill Check Answers Check My Work Legend Graded cell: Leave blank if no answer is needed. Scratchpad: Use as a non-graded workspace Save and…
Question 3 of 4 0/0.5 View Policies Show Attempt History Current Attempt in Progress Your answer is incorrect. You know that the return of Wildhorse Cyclicals common shares is 1.1 times as sensitive to macroeconomic information as the return of the market. If the risk-free rate of return is 4.60 percent and market risk premium is 5.71 percent, what is Wildhorse Cyclicals' cost of common equity capital? (Round intermediate calculation to 5 decimal places, e.g. 1.25140 and final answer to 2 decimal places, e.g. 15.25%.) Cost of common equity capital eTextbook and Media Save for Later Attempts: 2 of 3 used Submit Answer APR 山T( !!
Question 34 The equity portion of the balance sheet for BusFin Inc.is shown below. If the stock price is $30 per share, calculate the market to book ratio. Equity Portion of BusFinance Inc. Balance Sheet, 2022 Common stock ($0.25 par) $1,007,924 Capital surplus Retained earnings 27.46 41.32 48.67 30.00 13.73 $1,476,958 $1,919,506
11:26 What is the dividend yield on Stock A that sells at $20/share, when Company A pays a quarterly dividend of $0.10 per share? Skip dividend yield = [ ? ] % Give your answer as a percent rounded to the nearest tenth. Hint: Dividend Yield annual dividend share price Enter ^ v Done W a 123 space return Help
ACTIVITY 4 Given the following data, what should the price of the stock be? Required return: 10% Present dividend: P100 Dividend growth rate: 5%

SEE MORE QUESTIONS

Recommended textbooks for you

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning