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Hewlard Pocket's market value balance sheet is given. Assets A. Original balance sheet Cash Other assets Value of firm Liabilities and Shareholders' Equity Debt
Hewlard Pocket's market value balance sheet is given. Assets A. Original balance sheet Cash Other assets Value of firm Liabilities and Shareholders' Equity Debt Equity $ 150,000 950,000 $ 1,100,000 Value of firm $ 0 1,100,000 $ 1,100,000 Shares outstanding = 100,000 Price per share $1,100,000/100,000 $11 Pocket needs to hold on to $62,000 of cash for a future investment. Nevertheless, it decides to pay a cash dividend of $2.60 per share and to replace cash as needed with a new issue of shares. After the dividend is paid and the new stock is issued: a. What will be the price per share? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What will be the total value of the company? Note: Enter your answers in whole dollars, not in millions. c. What will be the total value of the stock held by new investors? Note: Do not round intermediate calculations. Enter your answers in whole dollars, not in millions. Round your answer to the nearest whole dollar amount. d. What will be the wealth of the existing investors including the dividend payment? Note: Do not round intermediate calculations. Enter your answers in whole dollars, not in millions. Round your answer to the nearest whole dollar amount. a. Price b. Total value of the company c. Total value of the stock held by new investors d. Existing shareholder wealth per share
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