Stock price and tax advantage

Assignment Help Accounting Basics
Reference no: EM13115850

The Carlton Corporation has $4 million in earnings after taxes and 1 million shares outstanding. The stock trades at a P/E ratio of 20. THE firm has $3 million in excess cash.

A. Compute the current price of the stock. B.If the 3 million is used to pay dividends , how much will dividends per share be? C.If the 3million is to repurchase shares in the market at a price of$83 per share, how many shares will be acquired? Round to the nearest share. E. If the P/E ratio remains constant, what will the price of the securities be? By how much in terms of dollars, did the repurchase increase the stock price? D. What will the new earning per share be? Round to two place to the right of the decimal.

B. Has the stockholder's total wealth changed as a result of the stock repurchase as opposed to receiving the cash dividends? G. What tax advantages might there be for a stock repurchase as compared to a cash dividend? H What are some other reason a corporation may wish to repurchase own shares in the market?

Reference no: EM13115850

Questions Cloud

Amount for consolidated financial statements : Required: Based on the above information, compute the amounts that should appear in the consolidated financial statements prepared for Barnes Company and it subsidiary, Dean Company, at year end for the following items: 1) sales; 2) cost of goods sol..
What is the molarity : Concentrated HCl is 36.5% HCl by mass and has a density of 1.18 g/mL.What is the molality?What is the molarity?
Description of price of stock : A share of common stock just paid a dividend of $3.25 per share. The expected long-run growth rate for this stock is 18%. If investors require a rate of return of 24%, what should the price of the stock be?
Consider any experimental weaknesses in their approach : Many scientists were reluctant to accept the results of Avery, MacLeod, and McCarty's experiments showing that DNA (rather than protein) was the transforming principle. Why?
Stock price and tax advantage : The Carlton Corporation has $4 million in earnings after taxes and 1 million shares outstanding. The stock trades at a P/E ratio of 20. THE firm has $3 million in excess cash.
Calculate jaedans free cash flow : Calculate Jaedan's free cash flow and calculate Jaedan's liquidity - calculate Jaedan's debt and profitability ratios.
Compute the p-value of the test statistic : Compute the p-value of the test statistic and discuss whether there is sufficient evidence to indicate that process 1 takes a statistically significant shorter time to manufacture the drives.
Explain how many rotations does it make on a path : baseball toward home plate at 85 miles per hour with a spin of 1800 revolutions per minute. Explain how many rotations does it make on a path of 60 feet?
How many bulbs be tested for estimate of the mean : How many bulbs should be tested so that we can be 90% confident that the estimate of the mean will not differ from the true mean life by more than 10 hours?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Way to explain accounting to a non-accountant

What is the best way to explain accounting to a non-accountant? Analyze the importance of having a good understanding of accounting, and the implications of a lack of understanding have for business?

  Journal entry of allowance for bad debts

Battle Tank, Inc. had net sales in 2004 of $1,200,000. At December 31, 2004, before adjusting entries, the balances in selected accounts were: Accounts Receivable $250,000 debit, and Allowance for Doubtful Accounts $2,100 credit.

  Recording journal entries of investments

Prepare journal entries for investments using the fair value and the equity method. How does it relate to the practice of accounting and its uses in business?

  Prepare a balance sheet

prepare a Balance Sheet, given details attached below,  Acid Test Ratio : 2.5,  Current Ratio : 1.5, Net working capital Rs. 10, 00,000, Fixed Assets ?, Share holders fund Rs. 15, 00,000, Stock\ Inventory ?

  Finding correct consolidated statements

Giant produces consolidated financial statements to combine the two companies. Which of the following statements is correct about these consolidated statements?

  Principles of accounting and journal entries

Your father runs a small auto body shop. He has decided to computerize his records and has asked you to explain the basics of accounting to him so that he can enter the data into his accounting software.

  Taxes and shares

Longhorn Company reports current E&P of $100,000 in 20X3 and accumulated E&P at the beginning of the year of negative $200,000. Longhorn distributed $300,000 to its sole shareholder on January 1, 20X3. The shareholder's tax basis in his stock in L..

  Determining long term investments

Dogwood City's water enterprise fund received interest of 10,000 on long term investments. How should this amount be reported on the statement of cash flows?

  Transaction-adjustment on appropriate balance sheet

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance sheet category and on net income

  Question on performance measures

Using information from the latest financial statement, compute operating leverage, ROI, EVA and another performance measure for SIRI (SiriusXM)

  Types of regulations requiring periodic reporting

What types of regulations requiring periodic reporting, both monetary and statistical, come along with the payroll function, and what are the reports required?

  Bledsoe large cap stock fund

Using the returns for the Bledsoe Large-Cap Stock Fund and the Bledsoe Bond Fund, graph the opportunity set if feasible portfolios.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd