Question

Question 2 ABC Corp. currently has $12 million in excess cash that it plans on returning...

Question 2

ABC Corp. currently has $12 million in excess cash that it plans on returning to its shareholders through a dividend payment. ABC's current share price is $24.4 and it has 34.8 million shares outstanding. In addition, the market value of the company's debt is $7 million. Assuming perfect markets, what is the dividend per share that ABC will be able to pay with the excess cash? Round your answer to two decimals (do not include the $-symbol in your answer)

Question 3

ABC Corp. currently has $32 million in excess cash that it plans on returning to its shareholders through a dividend payment. ABC's current share price is $18 and it has 28.5 million shares outstanding. In addition, the market value of the company's debt is $14 million. Assuming perfect markets, what will the share price of ABC be after it pays the dividend? Round your answer to two decimals (do not include the $-symbol in your answer)

Question 4

XYZ Corp. currently has $10 million in excess cash that it plans on returning to its shareholders through a share repurchase. XYZ's current share price is $22.2 and it currently has 33.8 million shares outstanding. In addition, the market value of the company's debt is $19 million. Assuming perfect markets, how many shares will XYZ be able to repurchase with the excess cash? Express your answer in millions and round your answer to two decimals.

Homework Answers

Answer #1
2) Excess Cash = $ 12 million
Current Share Price = $24.4
No. of Shares outstanding = 34.8 Million
Dividend per Share = $12 Million / 34.8 Million
Dividend per Share = 0.3448 per Share
3) Excess Cash = $ 32 million
Current Share Price = $18
No. of Shares outstanding = 28.5 Million
Dividend per Share = $32 Million / 28.5 Million = $1.1228 per Share
Assuming Perfect Market,
Share Price after payment of Dividend = $ 18 - $ 1.1228
Share Price after payment of Dividend = 16.88
4) Excess Cash = $ 10 million
Current Share Price = $22.2
No. of Shares outstanding = 33.8 Million
Assuming Perfect Market,
No. of Shares that can be repurchased using excess cash = $ 10 Million/ $ 22.2 per Share
No. of Shares that can be repurchased using excess cash = 450,450 (or) 0.45045 Million Shares
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