{"id":77599,"date":"2018-02-20T23:50:30","date_gmt":"2018-02-20T23:50:30","guid":{"rendered":"https:\/\/writemyessayfree.com\/stock-split-residual-distribution-policy-external-equity-financing"},"modified":"2017-08-18T07:15:19","modified_gmt":"2017-08-18T07:15:19","slug":"stock-split-residual-distribution-policy-external-equity-financing","status":"publish","type":"post","link":"https:\/\/www.benedictsol.com\/blogs\/stock-split-residual-distribution-policy-external-equity-financing\/","title":{"rendered":"Stock Split, Residual Distribution Policy, External Equity Financing"},"content":{"rendered":"
\n 1. Stock Split<\/p>\n

Suppose you own 4,000 common shares of Laurence Incorporated. The EPS is $8.00, the DPS is
$4.75, and the stock sells for $65 per share. Laurence announces a 2-for-1 split. Immediately
after the split, how many shares will you have?
What will the adjusted EPS and DPS be? Round your answers to the nearest cent.
EPS
DPS<\/p>\n

$
$<\/p>\n

What would you expect the stock price to be? Round your answer to the nearest cent.
$<\/p>\n

2.  Residual Distribution Policy<\/p>\n

Harris Company must set its investment and dividend policies for the coming year. It has three
independent projects from which to choose, each of which requires a $4 million investment.
These projects have different levels of risk, and therefore different costs of capital. Their
projected IRRs and costs of capital are as follows:
Project A: Cost of capital = 16%; IRR = 20%
Project B: Cost of capital = 10%; IRR = 15%
Project C: Cost of capital = 9%; IRR = 8%
Harris intends to maintain its 45% debt and 55% common equity capital structure, and its net
income is expected to be $11,296,500. If Harris maintains its residual dividend policy (with all
distributions in the form of dividends), what will its payout ratio be? Round your answer to two
decimal places.
%<\/p>\n

3. External Equity Financing
Gardial GreenLights, a manufacturer of energy efficient lighting solutions, has had such success
with its new products that it is planning to substantially expand its manufacturing capacity with a
$20 million investment in new machinery. Gardial plans to maintain its current 45% debt-tototal-assets ratio for its capital structure and to maintain its dividend policy in which at the end of
each year it distributes 40% of the year\u2019s net income. This year\u2019s net income was $8 million. How
much external equity must Gardial seek now to expand as planned? Enter your answer in
millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round
your answer to two decimal places.
$ million<\/p>\n

4. Stock Split
Fauver Enterprises declared a 3-for-1 stock split last year, and this year its dividend is $1.70
per share. This total dividend payout represents a 10% increase over last year\u2019s pre-split total
dividend payout. What was last year\u2019s dividend per share? Round your answer to the nearest
cent.
$<\/p>\n<\/fieldset>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

1. Stock Split Suppose you own 4,000 common shares of Laurence Incorporated. The EPS is $8.00, the DPS is $4.75, and the stock sells for $65 per share. Laurence announces a 2-for-1 split. Immediately after the split, how many shares Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-77599","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/77599","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=77599"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/77599\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=77599"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=77599"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=77599"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}