Falling forest products plans on paying dividends

Assignment Help Financial Management

Reference no: EM13875143

Falling Forest Products LLC will end 2014 with a net profit before tax of $400,000. The company is subject to a 40% federal plus state income tax rate, and has 100,000 shares of cumulative preferred stock that normally pay 40 cents per share per year in preferred stock dividends. Falling Forest Products LLC has always paid preferred stock dividends, but has the flexibility to not pay when times are bad. There are 100,000 shares of common stock currently outstanding. Falling Forest Products plans on paying dividends to its common stock shareholders in 2014.

a. Calculate Falling Forest Products LLC’s 2014 earnings per share.

b. If the firm paid common stock dividends of $0.50 per share, how many dollars will go to retained earnings?

c. The lumber market just collapsed. What will happen to common stock dividends in 2013 if Falling Forest Products LLC suddenly elects to not pay preferred shareholders any dividends in 2013?

Reference no: EM13875143

Questions Cloud

Consider the data above for a simple economy : Consider the data above for a simple economy. 1) What is the unemployment rate for this simple economy? 2) What is the labor force participation rate for this simple economy?

Managers want to estimate common stock value : Berth Cargo Corporation is considering going public. Managers want to estimate common stock value. The firm’s weighted average cost of capital is 11%, and it has $1.5 million of debt at market value, and $400,000 of preferred stock also at market val..

Hernandez company rents out a portion of its building : Hernandez Company rents out a portion of its building to Crider Company for $1,000 per month.

The gdp deflator is the broades : The GDP deflator is the broadest, most inclusive measure of change in the country's price level, since it includes all final goods and services produced and sold. But the GDP deflator is not used by the government or economists as the benchmark measu..

Falling forest products plans on paying dividends : Falling Forest Products LLC will end 2014 with a net profit before tax of $400,000. The company is subject to a 40% federal plus state income tax rate, and has 100,000 shares of cumulative preferred stock that normally pay 40 cents per share per year..

What is the value of zero-coupon bond with a par value : Please provide the steps to solving this problem using a financial calculator as well as reasonings for certain steps if needed: What is the value of zero-coupon bond with a par value of $1,000 and a yield to maturity of 5.20%? The bond has 12 years ..

Estimate the effective annual rate for continuously compound : Please provide the steps to solving this problem using a financial calculator as well as reasonings for certain steps if needed: Estimate the effective annual rate (EAR) for a continuously compounded annual nominal rate of 8.75%.

Present value of series of cash flows : What happens to the present value of a series of cash flows (increase or decrease) as the number of payments (length of time) increases, holding all other factors constant? Does the change occur at a constant rate or at a varying rate? How do we hand..

Prepare journal entries to record the issuance : The interest to be paid on the maturity date.

User Account

All Pages