Q #1

(Dividend policies) Final earnings estimates for Chilean Health Spa 8' Fitness Center have been prepared for the CFO of the company and are shown in the following table: @ . The firm has 7,700,000 shares of common stock outstanding As assistant to the CFO, you are asked to determine the yearly dividend per share to be paid depending on the following possible policies: at. A stable doiiar dividend targeted at 40 percent of earnings over a 5-year period. b. A small, regular dividend of $0.60 per share plus a year-end extra when the profits in any year exceed $20,000,000. The year-end extra dividend will equal 50 percent of profits exceeding $20,000,000. c. A constant dividend payout ratio of 35 percent. a. What is the yearly dividend per share to be paid depending on a staple dollar dividend targeted at 40 percent of earnings for years 1 through 5'? $ per share (Round to the nearest cent.) Data table PROFITS AFTER TAXES $13,000,000 21,000,000 19,000,000 23,000,000 25,000,000 (Click on the icon located on the topright comer of the data table abo we in order to copy its contents into a spreadsheet.) (Dividend policy and the issue of new shares of common stock) Your firm needs to raise $10 million to finance its capital expenditures for the coming year. The firm earned $4.8 million last year and will pay out half this amount in dividends. If the firm's CFO wants to finance new investments using no more than 50 percent debt financing, how much common stock will the firm have to issue to raise the needed $7.6 million? How much common stock will the firm have to issue? $ million (Round to two decimal places.)(Constant doilar dividend payout policy) Parker Prints is in negotiation with two of its largest customers to increase the firm's sales dramatically. The increase will require that Parker expand its production facilities at a cost of $20 million. Parker expects to pay out $7.5 million in dividends to its shareholders next year Parker maintains a 40 percent debt ratio in its capital structure. a. If Parker earns $14 million next year, now much common stock will the firm need to sell in order to maintain its target capital structure? b. If Parker wants to avoid selling any new stockI how much can the firm spend on new capital expenditures? a. If Parker earns $14 million next year, now much common stock will the firm need to sell in order to maintain its target capital structure? $ million (Round to two decimal places.) (Stock dividends) In the spring of 2016, the CFO of HTPL Distributing Company decided to distribute a stock dividend to its shareholders. Specically, the CFO proposed that the company pay 006 shares of stock to the holders of each share of common stock such that the holder of 1,000 shares of stock would receive an additional 60 shares of common stock, a. If the firm had total net income for the year of $1 1 000,000 and had 23,000,000 shares of common stock outstanding before the stock dividend, what was the firm's earnings per share? b. After paying the stock dividend, what was the firm's earnings per share? c. If you owned 1.000 shares of stock before the stock dividend, how many dollars of earnings did the firm earn from your 1.000-share investment? After the stock dividend was paid, how many dollars of earnings did the firm earn on your larger share holdings? What effect would you expect from the payment of the stock dividend on your total investment in the firm? a. Before the stock dividend, what was the firm's earnings per share? $ (Round to four decimal places.) (Stock splits) The debt and equity section of the Robson Corporation balance sheet is shown here: a . The current market price of the common shares is $20. Reconstruct the financial statement assuming that (a) a 15 percent stock dividend is issued and (b) a 2-for-1 stock split is declared. a. Reconstruct the financial statement assuming that a 15 percent stock dividend is issued Data table Debt $ (Round to the nearest dollar.) Debt $1,800.000 D Common equity Par ($2; 100,000 shares) 200.000 Paid-in capital 400.000 Retained earnings 900.000 $3,300.000 (Click on the icon located on the top-right corner offhe data table above in order to copy its contents into a spreadsheet.) (Stock repurchases and earnings per share) CareMore, Inc. provides in-home medical assistance to the elderly and earned net income of $5.1 million that it plans to use to repurchase shares of the firm's common stock. which is currently selling for $47 a share. CareMore has 15 million shares of stock outstanding. a. What fraction of the firm's shares can the rm repurchase for $5.1 million? b. If the share repurchase has no impact on the rm's net income, what will be its earnings per share after the repurchase? a. What fraction of the firm's shares can the rm repurchase for $5.1 million? \" (Round to two decimal places.)