Foundations of Financial Management

Block, Hirt, and Danielsen

Proble $18-14$

Obiectire: Cash dividend polien.

$\backslash$table$[[$Student Name:,Allizon Thompeon$],[$Course Name:,FlN$5056],[$Student ID:$,$TH$4702607],[$Course Number:,GNMEA$48]]$

Phillip: Rock and Mud iz rrying to determine the moximum om ount of oset dividends it can pry this yoar.

Assume itz bolsnce sheet is as follows:

$\backslash$table$[[\backslash$table$[[$Assets$],[$Cash$],[$Accounts reccivable$],[$Fixod Assets$],[$Totsl Asots$]],]]$

Liabilities and Stockholders"

$3.$ From a legal perspective, what i the moximum amount of dividends per shore the finm could pow? Is this resilistic?

b$.$ In terms of cash swailability, what is the moximum amount of dividenda per share the firm aould poy?

c$.$ Asaume the firm earned $18$ pereent return on stockholdersi equity laet year. If the borrd whethe to pay out $50$ percent of earningz in the form of dividend: how mueh will dividende per shane be$?$

$($Round to two places to the right of the decimsl point.$)$

Solution

Problee $18-14$

Isstriections

Enter formuls: to calculate the requinemente of this problem.

$3.$ From a legel perspective, whot iz the maximum amount of dividende por thane the firm could powe $10\mathrm{.}86$

Is this restiatie?

Moximum divids

c$.$ Assume the firm eprrned is puricent retunn on atochholdens' equity last year. If the board wishes to poy out $60$ pereent of earring: in the form of dividend:, how much will dividend: per shane be$?$

$$Found to two places to the right of the decimal point,!

Stockholderel equity

Fisturn on squity

Dividande

Dividend pes thare

FORMULA

FOFMULA

FORMULA

FORMULA