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Walker Machine Tools has 6 million shares of common stock outstanding. The current market price of Walker common stock is $62 per share rights-on. The company's net income this year is $20.00 million. A rights offering has been announced in which 600,000 new shares will be sold at $56.50 per share. The subscription price plus nine rights is needed to buy one of the new shares.

a.What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering?(Do not round intermediate calculations and round your answers to 2 decimal places.)

Earnings per share?

Pre-earnings ratio?

b.What would the earnings per share be immediately after the rights offering? What would the price-earnings ratio be immediately after the rights offering? (Assume there is no change in the market value of the stock, except for the change when the stock begins trading ex-rights.)

Earnings per share?

Pre-earnings ratio?

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The stock of Pills Berry Company is currently selling at $85 per share. The firm pays a dividend of $2.90 per share.

a.What is the annual dividend yield?

Dividend yield?

b.If the firm has a payout rate of 60 percent, what is the firm's P/E ratio?

P/E ratio?

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The Hastings Sugar Corporation has the following pattern of net income each year, and associated capital expenditure projects. The firm can earn a higher return on the projects than the stockholders could earn if the funds were paid out in the form of dividends.

Year Net Income Profitable Capital

Expenditure

1 $11 million $8 million

2 24 million 11 million

3 9 million 7 million

4 19 million 7 million

5 23 million 8 million

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The Hastings Corporation has 2 million shares outstanding (The following questions are separate from each other).

a.If the marginal principle of retained earnings is applied, how much in total cash dividends will be paid over the five years?(Enter your answer in millions.)

b.If the firm simply uses a payout ratio of 40 percent of net income, how much in total cash dividends will be paid?(Enter your answer in millions andround your answer to 1 decimal place.)

c.If the firm pays a10 percent stock dividend in years 2 through 5, and also pays a cash dividend of $3.40 per share for each of the five years, how much in total dividends will be paid?

d.Assume the payout ratio in each year is to be 20 percent of net income and the firm will pay a 10 percent stock dividend in years 2 through 5. How much will dividends per share for each year be? (Assume cash dividend is paid after the stock dividend).

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