A financial analyst is attempting to assess the future dividend policy of Interactive Technology by examining its life cycle. She anticipates no payout of earnings in the form of cash dividends during the developmental stage, (). During the growth stage, (II), she anticipates 17 percent of earnings will be distributed as dividends. As the firm progresses to the expansion stage, (II), the payout will go up to 37 percent, and eventually reach 58 percent during the maturity stage, (IV). a. Assuming EPS will be as follows during each of the four stages, indicate the cash dividend per share (if any) during each stage. (Do not leave any empty spaces; input a 0 wherever it is required. Round the final answers to 2 decimal places.) Stage I Stage II Stage III Stage IV $0.50 1.75 2.70 3.10 Dividends Stage 1 Stage II Stage III Stage IV $ $ $ $ b. Assume in Stage IV that an investor owns 340 shares and is in a 15.00 percent marginal combined tax bracket for dividends. What will be the investor's aftertax income from the cash dividend? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Aftertax income $ c. In what two stages is the firm most likely to utilize stock dividends or stock splits? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) 2 Stage 1 7 Stage 1 Wilson Pharmaceuticals has done very well in the stock market during the last three years. Its stock has risen from $55 per share to $80 per share. Its P/E ratio is 18.82. Its current statement of net worth is: Common stock (4 million shares issued; 10 million shares authorized) Retained earnings $ 60,000,000 45,000,000 Net worth $105,000,000 a. How many shares would be outstanding after a two-for-one stock split? (Enter the answer in millions.) Number of shares million b. How many shares would be outstanding after a three-for-one stock split? (Enter the answer in millions.) Number of shares million c. Assume Wilson earned $17 million. What would its EPS be before and after the two-for-one stock split? (Round the final answers to 2 decimal places.) EPS before split: EPS after 2:1 split EPS after 3:1 split $ d. What would the price per share be before and after the two-for-one and the three-for-one stock splits? (Assume the P/E ratio of 18.82 stays the same.) (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Price after 2-1 split Price after 3-1 split A financial analyst is attempting to assess the future dividend policy of Interactive Technology by examining its life cycle. She anticipates no payout of earnings in the form of cash dividends during the developmental stage, (). During the growth stage, (II), she anticipates 17 percent of earnings will be distributed as dividends. As the firm progresses to the expansion stage, (II), the payout will go up to 37 percent, and eventually reach 58 percent during the maturity stage, (IV). a. Assuming EPS will be as follows during each of the four stages, indicate the cash dividend per share (if any) during each stage. (Do not leave any empty spaces; input a 0 wherever it is required. Round the final answers to 2 decimal places.) Stage I Stage II Stage III Stage IV $0.50 1.75 2.70 3.10 Dividends Stage 1 Stage II Stage III Stage IV $ $ $ $ b. Assume in Stage IV that an investor owns 340 shares and is in a 15.00 percent marginal combined tax bracket for dividends. What will be the investor's aftertax income from the cash dividend? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Aftertax income $ c. In what two stages is the firm most likely to utilize stock dividends or stock splits? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) 2 Stage 1 7 Stage 1 Wilson Pharmaceuticals has done very well in the stock market during the last three years. Its stock has risen from $55 per share to $80 per share. Its P/E ratio is 18.82. Its current statement of net worth is: Common stock (4 million shares issued; 10 million shares authorized) Retained earnings $ 60,000,000 45,000,000 Net worth $105,000,000 a. How many shares would be outstanding after a two-for-one stock split? (Enter the answer in millions.) Number of shares million b. How many shares would be outstanding after a three-for-one stock split? (Enter the answer in millions.) Number of shares million c. Assume Wilson earned $17 million. What would its EPS be before and after the two-for-one stock split? (Round the final answers to 2 decimal places.) EPS before split: EPS after 2:1 split EPS after 3:1 split $ d. What would the price per share be before and after the two-for-one and the three-for-one stock splits? (Assume the P/E ratio of 18.82 stays the same.) (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Price after 2-1 split Price after 3-1 split
