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Dividend constraints Afirm has $850,000 in paid-in capital, retained earnings of $42.000 (including the current year's earnings), and 26,000 shares of common stock outstanding in
Dividend constraints Afirm has $850,000 in paid-in capital, retained earnings of $42.000 (including the current year's earnings), and 26,000 shares of common stock outstanding in the current year, it has $30,000 of earnings available for the common stockholders. a. What is the most the firm can pay in cash dividends to each common stockholder? (Assume that legal capital includes all paid-in capital.) b. What effect would a cash dividend of $1.11 per share have on the firm's balance sheet entries? c. If the firm cannot raise any new funds from external sources, what do you consider the key constraint with respect to the magnitude of the firm's dividend payments? a. If legal capital is assumed to include all paid-in capital, the most the firm can pay in cash dividends to each common stockholder is $ the nearest cent.) (Round to
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