Ace Products sells marked playing cards to blackjack dealers, It has not paid a dividend in many years, but is currently contemplating some kind of dividend The capital accounts for the firm are as follows: Common stock (2,800,000 shares at $10 par) Capital in excess, of par Retained earnings $28,000,000 6,000,000 26,000,000 Net worth $60,000,000 The increase in capital in excess of par as a result of a stock dividend is equal to the new shares created times (Market price - Par value). The company's stock is selling for $20 per share. The company had total earnings of $5,600,000 during the year. With 2,800,000 shares outstanding, earnings per share were $2. The firm has a P/E ratio of 10. o. What adjustments would have to be made to the capital accounts for a 10 percent stock dividend? Show the new capital accounts (Do not round Intermediate calculations, Input your answers in dollors, not millions (e.g. $1,230,000).) a. What adjustments would have to be made to the capital accounts for a 10 percent stock dividend? Show the new capital accounts (Do not round intermediate calculations. Input your answers in dollors, not millions (e.g. $1,230,000).) O Answer is complete and correct. Common stock Capital in excess of par Retained earnings 30,800,000 O 8,800,000 O 20,400,000 O Net worth 60.000,000 b. What adjustments would be made to EPS and the stock price? (Assume the P/E ratio remains constant) (Do not round intermediate calculations and round your answers to 2 decimal places.) O Answer is not complete. EPS Stock price 200 0 c. How many shares would an investor end up with if he or she originally had 90 shares? (Do not round intermediate calculetions and round your answer to the nearest whole share.) Number of shares
Ace Products sells marked playing cards to blackjack dealers, It has not paid a dividend in many years, but is currently contemplating some kind of dividend The capital accounts for the firm are as follows: Common stock (2,800,000 shares at $10 par) Capital in excess, of par Retained earnings $28,000,000 6,000,000 26,000,000 Net worth $60,000,000 The increase in capital in excess of par as a result of a stock dividend is equal to the new shares created times (Market price - Par value). The company's stock is selling for $20 per share. The company had total earnings of $5,600,000 during the year. With 2,800,000 shares outstanding, earnings per share were $2. The firm has a P/E ratio of 10. o. What adjustments would have to be made to the capital accounts for a 10 percent stock dividend? Show the new capital accounts (Do not round Intermediate calculations, Input your answers in dollors, not millions (e.g. $1,230,000).) a. What adjustments would have to be made to the capital accounts for a 10 percent stock dividend? Show the new capital accounts (Do not round intermediate calculations. Input your answers in dollors, not millions (e.g. $1,230,000).) O Answer is complete and correct. Common stock Capital in excess of par Retained earnings 30,800,000 O 8,800,000 O 20,400,000 O Net worth 60.000,000 b. What adjustments would be made to EPS and the stock price? (Assume the P/E ratio remains constant) (Do not round intermediate calculations and round your answers to 2 decimal places.) O Answer is not complete. EPS Stock price 200 0 c. How many shares would an investor end up with if he or she originally had 90 shares? (Do not round intermediate calculetions and round your answer to the nearest whole share.) Number of shares
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 11P
Related questions
Question
Transcribed Image Text:Ace Products sells marked playing carcs to blackjack dealers, It has not paid a dividend in many years, but is currently contemplating
some kind of dividend
The capital accounts for the firm ate as follows:
Common stock (2,800,000 shares at $10 par)
Capital in excess of par
Retained earnings
$28,000,000
6,000,000
26,000,000
Net worth
$60,000,000
"The increase in capital in excess of par as a result of a stock dividend is equal to the new shares created times (Market price- Par
value).
es
The company's stock is selling for $20 per share. The company had total earnings of $5,600,000 during the year. With 2,800,000
shares outstanding, earnings per share were $2. The firm has a P/E ratio of 10.
o. What adjustments would have to be made to the capital accounts for a 10 percent stock dividend? Show the new capital accounts
(Do not round intermediate calculations. Input your answers in dollors, not millions (e.g. $1,230,000),)
a. What adjustments would have to be made to the capital accounts for a 10 percent stock dividend? Show the new capital accounts
(Do not round intermediate calculations. Input your answers in dollars, not millions (e.g. $1,230,000).)
Answer is complete and correct.
Common stock
30,800,000
Capital in excess of par
8,800,000
Retained earnings
20,400,000
Net worth
60.000,000
b. What adjustments would be made to EPS and the stock price? (Assume the P/E ratio remains constant) (Do not round intermediate
calculations and round your answers to 2 decimal places.)
Answer is not complete.
EPS
200
Stock price
c. How many shares would an investor end up with if he or she originally had 90 shares? (Do not round intermediate calculations and
round your answer to the nearest whole share.)
Number of shares
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