Reference no: EM132739944

1). Suppose that a company's equity is currently selling for $25.75 per share and that there are 3.7 million shares outstanding and 17 thousand bonds outstanding, which are selling at 96 percent of par. If the firm was considering an active change to their capital structure so that the firm would have a D/E of 1.7, which type of security (stocks or bonds) would they need to sell to accomplish this, and how much would they have to sell? (Round your intermediate ratio to 4 decimal places.)

2). JEN Corp. is expected to pay a dividend of $4.50 per year indefinitely. If the appropriate rate of return on this stock is 12 percent per year, and the stock consistently goes ex-dividend 25 days before dividend payment date, what will be the expected maximum price in light of the dividend payment logistics?

3). Suppose a firm pays total dividends of $3.0 million out of net income of $27.0 million. What would the firm's payout ratio be?

4). Suppose a firm has a retention ratio of 40 percent, net income of $31.2 million, and 6.2 million shares outstanding. What would be the dividend per share paid out on the firm's stock?

5). Calculating Costs of Issuing Stock Your company needs to raise $4.05 million to finance plant expansion. In discussions with its investment bank, you learn that the bankers recommend a gross price of $50.25 per share and that 95,000 shares of stock be sold. If the net proceeds on the stock sale leaves your company with $4.05 million, what is the underwriter's spread per share on the stock issue.