Reference no: EM132894452

Lucky International Company (Lucky), which is a famous sport-retailing house, is a multi-international enterprise and has many retail stores in 120 places.

The owner's equity accounts for Lucky International are shown here:

Common stock ($1 par value) $30,000
Capital surplus 285,000
Retained earnings 649,180
Total owners' equity 964,180

Section A:

Question i. If Lucky's stock currently sells for $30 per share and a 10 percent stock dividend is declared, how many new shares will be distributed? show how the equity accounts would change.

Question ii. If Lucky declared a 25 percent stock dividend, how would the accounts change?

Section B:

Question i. Since Lucky is still facing the risk of international exchanges, the management is considering using cross hedging. You are asked to conduct analysis for Lucky before they use cross hedging.

Section C:

Question i. The management of Lucky decided to adopt defensive merger tactics. Are such activities beneficial to shareholders? Are these types of activities ethical? Discuss.