Problem 1

Jaguar, Inc. maintains a debt-equity ratio of .60 and follows a residual dividend policy. The company has after-tax earnings of $3,100 for the year and needs $3,000 for new investments. What is the total amount Jaguar will pay out in dividends for this year? Show your work.

Problem 2

The common stock of Vicary, Inc. is selling for $78 a share. Currently, the firm has a total market value of $6,825,000.

a)How many shares of stock will be outstanding if the firm does a 3-for-2 stock split? b) What will the share price be after the stock split.