GNB Inc. sets its dividend using the target payout model. Using the data in the table, below, calculate the dividend for Year 1. Selected Financial Information GNB Inc. Dividend per share Year 0 $1.446 Target Payout Rate 35% Earnings per share Year 0 $3.50 Earnings per share Year 1 $3.35 Adjustment factor 0.15 A) $1.296 […]
Gecko & Co. uses the residual dividend model to set its dividends. Selected financial information for Gecko is provided in the table below. Selected Financial Information Gecko & Co. Net income $32 million Investments $36.9314 million Dividends per Share $0.40 Shares Outstanding 15.37 million What is Gecko’s capital structure weight for equity? A) 0.30 B) […]
Spacely Sprockets Inc. sets its dividend using the target payout ratio policy. Selected financial data for Spacely is available in the table below. What is Spacely’s target payout rate? Selected Financial Information Spacely Sprockets Inc. Dividend per share Year 0 $2.538 Dividend Per share Year 1 $2.546 Earnings per share Year 0 $2.25 Earnings per […]
GloboCorp is all equity financed and generates perpetual annual EBIT of $100. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. GloboCorp has 1,500 shares outstanding which trade for $0.40. The stockholders of GloboCorp require a return of 10%. GloboCorp […]
Which of the following are rights of stockholders? A) To share in the firm’s profits after all other creditors have been satisfied B) To be guaranteed a dividend C) To decide whether or not to pay taxes on capital gains D) To vote for directors, but never on specific issues E) To avoid losses when […]
Jones Crusher Company is evaluating the proposed acquisition of a new machine. The machine will cost $190,000, and it will cost another $33,000 to modify it for special use by the firm. The machine falls into the MACRS 3-year class, and it will be sold after 3 years of use for $110,000. The machine will […]
Sweetums Inc, a confectioner best known for its chocolate ogre balls, uses the residual dividend model to set its dividends. Selected financial information for Sweetums Inc is provided in the table below. Sweetums Inc has many new project opportunities and so has decided to cancel its dividend this year. What is the most that it […]
Which of the following statements best describes mutual funds? A) They are illegal in the United States, but popular in Europe. B) They enable investors to buy many shares of stock in a single firm at a lower cost than using a stockbroker. C) They provide good investment returns, but insufficient diversification. D) They enable […]
The primary role of a financial system is to A) make savvy investors rich. B) regulate the banking system. C) enable financial managers to evaluate investment projects with a system that always selects the correct opportunity for their firm. D) channel funds from savers to borrowers who need funds for investment projects. E) provide employees […]
Sweetums Inc, a confectioner best known for its mint ogre balls, uses the residual dividend model to set its dividends. Selected financial information for Sweetums Inc is provided in the table below. Given the investment plan summarized in the table, how much new debt will it have to take on in order to maintain its […]
