issuance of preferred and common stocks and the declaration and payment of dividends. The board of directors must always authorize all dividends. A dividend distributes cash‚ assets‚ or the company’s stock. This is distributed to the company’s stakeholders. Before authorizing a dividend‚ a company must have sufficient retained earnings and cash (cash dividend) or sufficient authorized stock (stock dividend). Before cash dividends are issued to stockholders‚ the following conditions must exist: the board
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considered a permanent investment. Stockholders are people who invest in stocks and their ownership in the corporation is evidenced by a stock certificate. Stocks may be obtained thru: * Subscription * Purchase * Issuance of stock dividends Almost all of the initial capital of the corporation including a large segment of the future capital comes from the sale of stock. Stock Financing * Refers to the procurement of corporate funds through the sale of shares of stocks to prospective
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* 7.4/100 = $74 PV factor = (1/i)*(1- 1/(1+i)^n) = 6.4176 So‚ PV = $74*6.4176 = 474.90| So the fair value of bond = 474.90+422.41 = $897.31 A10. (Dividend discount model) Assume RHM is expected to pay a total cash dividend of $5.60 next year and its dividends are expected to grow at a rate of 6% per year forever. Assuming annual dividend payments‚ what is the current market value of a share of RHM stock if the required return on RHM common stock is 10%? Current market value = D1/(Required
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FI 410 Final Exam Study Guide Chapter 2 and 3: Investment risk- pertains to the probability of earning a return less than that expected. Standard deviation measures the stand-alone risk of an investment The larger the std deviation‚ the higher the probability that returns will be far below the expected return Two-Stock Portfolios: Can be combined to form a risklss portfolio if correlation (p)= -1.0 Risk is not reduced at all if the two stocks have correlation (p)= +1.0 In general‚ stocks have an
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* 7.4/100 = $74 PV factor = (1/i)*(1- 1/(1+i)^n) = 6.4176 So‚ PV = $74*6.4176 = 474.90| So the fair value of bond = 474.90+422.41 = $897.31 A10. (Dividend discount model) Assume RHM is expected to pay a total cash dividend of $5.60 next year and its dividends are expected to grow at a rate of 6% per year forever. Assuming annual dividend payments‚ what is the current market value of a share of RHM stock if the required return on RHM common stock is 10%? Current market value = D1/(Required
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Khol’s Corporation JC Penny Corporation Earnings per share As given in the income statement $3.67 $1.64 The comparison of these two numbers are not meaningful‚ the number of shares outstanding differs tremendously. Current ratio Current assets $5‚645 = 2.08 $6‚370 = 2.41 Kohl’s inventory turnover is slightly better by .3 than JC Penney. This might indicate that Kohl’s volume of sales in terms of inventory is better than JC Penney. Current liabilities $2
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deciding to use the extra cash flow to pay a special one-time dividend because this could lead to the stock decreasing in price. If the company decides to do this I believe the value of Electronic Timing would decrease. I believe this because there will be a transfer of value between the company and its shareholders. 2. Jessica’s proposal would help with the growth of the company. By deciding “not” to use the extra cash to pay dividends Electronic Timing should plan on growing its manufacturing
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Stocks Name Instructor XACC / 291 Date Stocks 2. Stocks shares known as “preferred”‚ because in the event of the company being liquidation‚ the preferred stock shares will receive dividends‚ and business assets before the common shares (Crook‚ 2000). If the company does not have enough money to pay both the preferred shares‚ and the common shares‚ the preferred shareholder must receive his shares first. Many different types of preferred
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of $450‚000 valued at historical cost and $500‚000 stated at fair value. The difference was due to the increased value of buildings with a remaining life of 15 years. During 2007 and 2008 Stator reported net income of $25‚000 and $15‚000 and paid dividends of $10‚000 and $12‚000‚ respectively. Rotor uses the equity method. 1. Based on the preceding information‚ what amount of differential will be amortized annually? A. $0 B. $750 C. $1‚000 D. $2‚000 2. Based on the preceding information
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Ch 10: 3‚ 4‚ 5‚ 7; Ch 14: 4 3. Jersey mining earns $9.50 a share‚ sells for $90‚ and pays a $6 per share dividend? The stock is split two for one and a $3 per share cash dividend is declared. (a) What will be the new price of the stock? New Price: $90/2 = $45 (b) If the firm total earning do not change‚ what is the payout ratio before and after the stock split? Before: $6/9.50 = 63.16% After: $3/4.75 = 63.16% 4. Firm A had the following selected items on its balance sheet: Cash: 28‚000‚000
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