MyTel Corp, an Internet service provider, has prospered during the past seven years, and recently the company's share price has shot up to $248.00. MyTel's management wishes to decrease theshare price to the range of $106.00 to $129.00, which will be attractive to more investors. Should the company issue a 100 percent stock dividend or split the stock? Why? If you propose astock spilt, state the split ratio that will accomplish the company's objective. Show your computations.CODThe company has two options: to split the stock or to issue a 100% stock dividend. If it uses a 2-for-1 stock split ratio, then both options will decrease the company's stock price to $

Stock split and stock dividend both are corporate actions, however the purposes of both the actions…

Answered: MyTel Corp. Internet service provider,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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MyTel Corp, an Internet service provider, has prospered during the past seven years, and recently the company's share price has shot up to $248.00. MyTet's management wishes to decrease the share price to the range of $106.00 to $129.00, which will be attractive to more investors. Should the company issue a 100 percent stock dividend or split the stock? Why? If you propose a stock spit, state the split ratio that will accomplish the company's objective. Show your computations. COD The company has two options: to split the stock or to issue a 100% stock dividend. If it uses a 2-for-1 stock split ratio, then both options will decrease the company's stock price to $
Brinkley Resources stock has increased significantly over the last five years, selling now for $160 per share. Management feels this price is too high for the average investor and wants to get the price down to a more typical level, which it thinks is $25 per share. What stock split would be required to get to this price, assuming the transaction has no effect on the total market value? Put another way, how many new shares should be given per one old share? Select the correct answer. a. 7.25 b. 4.70 c. 5.55 d. 6.40 e. 3.85
Bon Chance, Inc., has an odd dividend policy. The company has just pald a dividend of $6.75 per share and has announced that it will increase the dividend by $10.50 per share for each of the next four years, and then never pay another dividend. If you require a return of 13 percent on the company's stock, how much will you pay for a share today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current share price
Ford Motor is evaluating an extra dividend versus a share repurchase. In either case $20,000 would be spent. Current earnings are $6.0 per share, and the stock currently sells for $40 per share. There are 4,000 shares outstanding. Ignore taxes and other imperfections in answering parts (a) and (b). Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth. a. b. What will be the effect on Ford Motor's EPS and PE ratio under the two different scenarios? C. In the real world, which of these actions would you recommend? Why? formulation: DPS= Tol Div (or excess cash) / No. of share [for unlevered firm] Share price = V/no. of share P ex-div = P - DPS EPS= Earnings (assume a constant) / no. of share P.E. = stock price/ EPS No. of share repurchase = Excess Cash / Stock Price
Premier, Incorporated, has an odd dividend policy. The company has just paid a dividend of $11.25 per share and has announced that it will increase the dividend by $9.25 per share for each of the next four years, and then never pay another dividend. If you require a return of 13 percent on the company’s stock, how much will you pay for a share today? McCabe Corporation is expected to pay the following dividends over the next four years: $5.40, $16.40, $21.40, and $3.20. Afterward, the company pledges to maintain a constant 6 percent growth rate in dividends forever. If the required return on the stock is 9 percent, what is the current share price? Synovec Corporation is growing quickly. Dividends are expected to grow at a rate of 32 percent for the next three years, with the growth rate falling off to a constant 6.2 percent, thereafter. If the required return is 14 percent and the company just paid a dividend of $2.85, what is the current share price? The Dahlia Flower…
Solinux, Inc., is a young start-up company and will not pay dividends on its stock for the next 8 years, since the firm needs to plow back its earnings to fuel growth. The company will then pay a $1.76 per share dividend in year 9 and will increase the dividend by 3.7 percent per year thereafter. If investors require 8.9 percent return to invest in this stock, what is its current share price? (Do not include the dollar sign ($), Round your answer to 2 decimal places
Solinux, Inc., is a young start-up company and will not pay dividends on its stock for the next 8 years, since the firm needs to plow back its earnings to fuel growth. The company will then pay a $2.72 per share dividend in year 9 and will increase the dividend by 4.1 percent per year thereafter. If investors require 8.2 percent return to invest in this stock, what is its current share price? (Do not include the dollar sign ($). Round your answer to 2 decimal places (e.g.. 32.16).
Bon Chance, Inc., has an odd dividend policy. The company has just paid a dividend of $9.50 per share and has announced that it will increase the dividend by $7.50 per share for each of the next four years, and then never pay another dividend. A. If you require a return of 15 percent on the company’s stock, how much will you pay for a share today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The CFO of General Electric corporation is deciding if his company should invest 500,000 shares of Lightbridges industries.They manufacture innovative smart led light systems for residential homes.Lightbridge industries stock price is currently listed at $24.84 per share, and the expected dividend yield is 5.4%. a) What is the expected value of the first dividend payment at the end of the year? b)How would you use the dividend yield model to value the price of a stock if it presently does not pay dividends but is expected to pay dividends in the future?
Johnson Inc. wishes to expand its facilities. The company currently has 6 million shares outstanding and no debt. The stock sells for $50 per share, but the book value per share is $20. Net income for Johnson is currently $12 million. The new facility will cost $20 million, and it will increase net income by $800,000. Johnson raises stock at the current price to finance the facility. Assume a constant price–earnings ratio. Does stock price dilution occur? (A) stock price dilution occurs. (B) stock price dilution does not occur.
Blue Corp. is evaluating an extra dividend versus a share repurchase. In either case, $5,500 would be spent. Current earnings are $1.11 per share and the stock currently sells for $42 per share. There are 2,500 shares outstanding. Ignore taxes and other imperfections. If Blue Corp. pays a dividend, what will be the dividend per share? After the dividend is paid, how many shares will be outstanding and what will the price per share be? Enter your answers rounded to 2 DECIMAL PLACES. NOTE: Fractional shares are possible (Ex. 0.49 shares) Dividend 2.2 ☑ Correct response: 2.2±0.01 Shares outstanding = 2500 Correct response: 2,500 Stock price = 39.8 Correct response: 39.8±0.01 Click "Verify" to proceed to the next part of the question. After the $2.2 dividend, the price falls to $39.8 per share. What are earnings per share (EPS) and the price earnings (P/E) ratio? Enter your answers rounded to 2 DECIMAL PLACES. EPS = Number P/E RatioNumber Click "Verify" to proceed to the next part of the…
Hot Wings, Inc has an odd divdend policy. The company has just paid a dividend of $8.10 per share and has announced that it will increase the dividend by $6.10 per share for each of the next four years, and then never pay another dividend. Required: If you require a 13.50 percent return on the company's stock, how much will you pay for a share today?

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