Dividends and Taxes

1084 Words May 24th, 2015 5 Pages
Problem 17-1 Dividends and Taxes [LO2]
Dark Day, Inc., has declared a $5.60 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. Dark Day sells for $94.10 per share, and the stock is about to go ex-dividend. What do you think the ex-dividend price will be? (Round your answer to 2 decimal places. (e.g., 32.16)) Ex-dividend price
$

Problem 17-2 Stock Dividends [LO3]
The owners’ equity accounts for Alexander International are shown here:

Common stock ($0.60 par value)
$
45,000 Capital surplus 340,000 Retained earnings 748,120

Total owners’ equity
$
1,133,120
…show more content…
is shown here in market value terms. There are 5,000 shares of stock outstanding. Market Value Balance Sheet Cash
$
45,100 Equity
$
495,100 Fixed assets 450,000

Total
$
495,100 Total
$
495,100

Instead of a dividend of $1.40 per share, the company has announced a share repurchase of $7,000 worth of stock. How many shares will be outstanding after the repurchase? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Shares outstanding

What will the price per share be after the repurchase? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) New stock price
$

Problem 17-7 Stock Dividends [LO3]
The market value balance sheet for Sci-Fi Crimes Manufacturing is shown here. Sci-Fi Crimes has declared a 15 percent stock dividend. The stock goes ex dividend tomorrow (the chronology for a stock dividend is similar to that for a cash dividend). Market Value Balance Sheet Cash
$
83,000 Debt
$
142,000 Fixed assets 670,000 Equity 611,000

Total
$
753,000 Total
$
753,000

There are 18,000 shares of stock outstanding. What is the current share price? (Round your answer to 2 decimal places. (e.g., 32.16)) New stock price
$ per

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