Solution-What would eps be before and after the stock

What would eps be before and after the stock dividend

Assignment Help Finance Basics

Reference no: EM131129833

A Firm consists of 250 grocery stores throughout the Midwest. At the beginning of 2010 its statement of net worth showed the following information: Common Stock ($2 par) $800,000; Capital paid in excess of par $1,400,000 and retained earnings $500,000. During the year, net income equaled $160,000. Management was undecided on what to do with the income. Acme paid an annual dividend of $.25 per share last year and the stock price is currently $14.50. Acme has a 6% growth rate in earnings and dividends, and is in the 40% tax bracket.

(a) What return on investment would Acme have to earn in order to justify retaining 2010's earnings? Use the formula: Ke = D1/P0 + g

(b) What changes would occur in stockholder's equity if a $.15 cash dividend was paid? If a 5% stock dividend was given and no cash dividend was paid?

Reference no: EM131129833

Questions Cloud

Requisition of capital purchases for a laboratory : Create a standardized procedure and a request form for the requisition of capital purchases for a laboratory. Be sure to include sections for Summary, Benefits, Data, and Financial Interpretation in your form. Be sure that you explain on the form or ..

What is the expected value of perfect information : The owner of a landscaping company is considering what to do with her company over the next two years. The last couple of years, her business has experienced a substantial increase in demand. Lately, however, there has been talk of a developer planni..

Essay - human trafficking : Provide an outline of human trafficking and evaluate attempts to control it. For this task, you will be required to conduct research on your chosen topic from those given below and to work as a group to present your findings. You will then be requir..

Violence sells but at what cost : Violence sells, but at what cost? Discuss whether violence in video games can be shown to have an adverse effect on users

What would eps be before and after the stock dividend : What return on investment would Acme have to earn in order to justify retaining 2010's earnings? Use the formula: Ke = D1/P0 + g. What changes would occur in stockholder's equity if a $.15 cash dividend was paid? If a 5% stock dividend was given and ..

How did this increase affect lake break even point and margn : On January 1, Lake Corporation increased its management salaries. All other costs and revenues were unchanged. How did this increase affect Lake's break-even point and margin of safety?

What principle have you illustrated : What would your profit be? What profit do you actually expect? What principle have you illustrated?

What is the bonds straight debt value : What is the bond's straight-debt value (a) $684.78 (b) $720.82 (c) $758.76 (d) $798.70 (e) $838.63

Discuss the two major types of leases : Discuss the two major types of leases

User Account

All Pages

What would eps be before and after the stock dividend

Reference no: EM131129833

Reference no: EM131129833

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT