Question

1. A company expects to have net income of $3,100,000 during the next year. Its target...

1. A company expects to have net income of $3,100,000 during the next year. Its target capital structure is 30% debt and 70% equity. The company has determined that the optimal capital budget for the coming year is $3,000,000. If Davis follows a residual distribution policy (with all distributions in the form of dividends) to determine the coming year’s dividend, then what is Davis's dividend payout ratio?

A. 3.82%

B. 51.6%

C. 32.3%

D. 19.2%

2. A stock was trading at $200 per share before its recent 4-for-1 stock split. The 4-for-1 split led to a -10% change in the stock price. What was the stock price after the stock split?

A. $45.0

B. $180.0

C. $50.0

D. $55.0

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A company expects to have net income of $3,100,000 during the next year. Its target capital...
A company expects to have net income of $3,100,000 during the next year. Its target capital structure is 30% debt and 70% equity. The company has determined that the optimal capital budget for the coming year is $3,000,000. If Davis follows a residual distribution policy (with all distributions in the form of dividends) to determine the coming year’s dividend, then what is Davis's dividend payout ratio? 38.2% 51.6% 32.3% 19.2% A company has just implemented a 1-for-10 reverse stock split....
Express Industry’s expected net income for next year is $1.6 million. Its target, and current, capital...
Express Industry’s expected net income for next year is $1.6 million. Its target, and current, capital structure is 30 percent debt and 70 percent common equity. The director of capital budgeting has determined that the optimal capital budget for next year is $2 million. Suppose Express uses the residual dividend policy to determine next year’s dividend. What is the expected dividend payout ratio? Can we use the residual dividend policy to set dividends on an annual basis? Explain why.
Express Industry’s expected net income for next year is $1.6 million. Its target, and current, capital...
Express Industry’s expected net income for next year is $1.6 million. Its target, and current, capital structure is 30 percent debt and 70 percent common equity. The director of capital budgeting has determined that the optimal capital budget for next years is $2 million. Suppose Express uses the residual dividend policy to determine next year’s dividend. What is the expected dividend payout ratio? Can we use the residual dividend policy to set dividends on an annual basis? Explain why.
Yasheen Company expects to earn $3.50 per share during the current year, its expected dividend payout...
Yasheen Company expects to earn $3.50 per share during the current year, its expected dividend payout ratio is 66%, its expected constant dividend growth rate is 6.0%, and its common stock currently sells for $32.50 per share. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock? a. 13.37% b. 13.70% c. 13.98% d. 13.74% e. 13.48%
A company reports net income in the current year of $600,000. During the year, the company...
A company reports net income in the current year of $600,000. During the year, the company declares and pays $20,000 in cash dividends on its common stock and $80,000 in dividends on its convertible preferred stock. The company has 20,000 shares of the preferred stock outstanding all year and each isconvertible into three shares of common stock. The company starts the year with 170,000 shares of common stock outstanding. On July 1 of that year, 20,000 additional shares of common...
1. Dividends come out of a company’s net income. Dividends are reported on a per share...
1. Dividends come out of a company’s net income. Dividends are reported on a per share basis. Earnings Per Share (EPS) is a company’s net income per share of stock. The payout ratio is the percentage of earnings that a company pays out as dividends. So, to calculate payout ratio, you dividend by the EPS. a. If a company pays a dividend of $1.2 and its EPS is $3, what is the payout ratio? A company will often try to...
Residual Distribution Policy Harris Company must set its investment and dividend policies for the coming year....
Residual Distribution Policy Harris Company must set its investment and dividend policies for the coming year. It has three independent projects from which to choose, each of which requires a $6 million investment. These projects have different levels of risk, and therefore different costs of capital. Their projected IRRs and costs of capital are as follows: Project A: Cost of capital = 17%; IRR = 16% Project B: Cost of capital = 12%; IRR = 10% Project C: Cost of...
Residual Distribution Policy Harris Company must set its investment and dividend policies for the coming year....
Residual Distribution Policy Harris Company must set its investment and dividend policies for the coming year. It has three independent projects from which to choose, each of which requires a $4 million investment. These projects have different levels of risk, and therefore different costs of capital. Their projected IRRs and costs of capital are as follows: Project A: Cost of capital = 15%; IRR = 16% Project B: Cost of capital = 13%; IRR = 11% Project C: Cost of...
Residual Distribution Policy Harris Company must set its investment and dividend policies for the coming year....
Residual Distribution Policy Harris Company must set its investment and dividend policies for the coming year. It has three independent projects from which to choose, each of which requires a $3 million investment. These projects have different levels of risk, and therefore different costs of capital. Their projected IRRs and costs of capital are as follows: Project A: Cost of capital = 18%; IRR = 21% Project B: Cost of capital = 14%; IRR = 16% Project C: Cost of...
ABC Company is experiencing a rapid growth. The first dividend will be paid next year (at...
ABC Company is experiencing a rapid growth. The first dividend will be paid next year (at year . After that, dividends are expected to grow at 20% per year during the next two years (years 2 and 3), and then 5% per year indefinitely. The required rate of return on this stock is 15%, and the stock is currently selling for 50TL. What is the expected dividend for the coming year (Div1)? (5 points) What is the expected price of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT