Marcus Corporation has a capital budget of $5 million and wants to maintain a capital structure of 40% debt and 60% equity. The company expects
Marcus Corporation has a capital budget of $5 million and wants to maintain a capital structure of 40% debt and 60% equity. The company expects net income of 4 million. What is the expected dividend payout ratio if the company follows a residual dividend policy?
MLC, Inc. stock sold for $75 per share prior to a 4 for 1 stock split. What is the expected post-split stock price,everythingelse held constant?
Acompanys dividend policy decision shouldnotbe influenced by which of the following?
| Constraints imposed by the firm's bond indenture. |
| The fact that much of the firm's equipment has been leased rather than purchased |
| The firm's ability to accelerate investment projects. |
| The firm's ability to delay investment projects |
A company's stock sells for $2.00 per share. The company wants to use a reverse split to get the price up to $22per share. How many of the old shares must be given up for one new share to get to the $22 price? Assume thistransaction has no effect on market value.
Which of the following would be most likely to result in an increase in a firm's dividend payout ratio?
| Its access to the capital markets decreases. |
| It has more high-return investment opportunities |
| Its accounts receivable increase due to a change in its credit policy. |
| It has fewer high-return investment opportunities. |
A company wants to raise $10 million in equity at an expected offering price of $20 per share. Its investment banker will receive $1.50 for each share sold and incur expenses of $1 million. How many shares must be sold for the company to receive $10 million. Round to the nearest whole number.
A company is planning an IPO of 10 million shares. Each share is expected to sell at $10 per share. The underwriterswill charge an 8% spread and incur expenses of $500,000. How much will the company receive if all shares sell at theexpected price?
A company sold 10 million shares in an IPO at a price of $10 per share. The underwriters charged an 8% fee and incurred expenses of $500,000. Price per share at the end of the first day was $12.50. How much money was left on the table?
Which of the following is a good reason for a company to go public?
| The company has excess capital |
| The company has a low debt ratio |
| The company's founders want to diversify |
| Costs of reporting will be low |