Question 25)Health Systems Inc. is considering a 10 percent stock dividend. The capital accounts are as follows: Common stock (6,000,000 shares at $10 par)$ 60,000,000 Capital in excess of par*35,000,000 Retained earnings75,000,000 Net worth$170,000,000 *The increase in capital in excess of par as a result of a stock dividend is equal to the shares created times […]
Question 24)Worst Buy Company has had a lot of complaints from customers of late, and its stock price is now only $2 per share. It is going to employ a one-for-six reverse stock split to increase the stock value. Assume Dean Smith owns 72 shares. a.How many shares will he own after the reverse stock split? (Do […]
Question 23)The Hastings Sugar Corporation has the following pattern of net income each year, and associated capital expenditure projects. The firm can earn a higher return on the projects than the stockholders could earn if the funds were paid out in the form of dividends. YearNet IncomeProfitable CapitalExpenditure1 $19 million $ 7 million 2 19 million 12 million 3 9 million 6 million 4 14 million 7 […]
Question 22)The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently selling for $4 per share. Common stock (60,000 shares at $1 par)$60,000 Capital in excess of par 60,000 Retained earnings 180,000 Total equity$300,000 The firm intends to first declare a 5 percent stock dividend and then pay a 20-cent cash […]
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