Cpa Firm

746 WordsNov 23, 20153 Pages
Problem 17-7 on Ex-dividend Price Based on Chapter 17 Payout Policy Natsam Corporation has $250 million of excess cash. The firm has no debt and 500 million shares outstanding with a current market price of $15 per share. Natsam’s board has decided to pay out this cash as a one-time dividend. a. What is the ex-dividend price of a share in a perfect capital market? $250/500 = 0.50 Answer: the ex-dividend price of a share in a perfect capital market is 0.50 b. If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete? Answer: the price of the share once the repurchase is complete is $15.00 c. In a perfect…show more content…
Assuming that you own only the Series A preferred stock (and that each share of all series of preferred stock is convertible into one share of common stock), what percentage of the firm do you own after the last funding round? Answer: Percentage of the firm do you own after the last funding round = No. of shares in series A/Total no. of shares*100 Percentage of the firm do you own after the last funding round = 5000000/7000000 Percentage of the firm do you own after the last funding round =
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