The balance sheet for Paint Cart Corp. is shown here in market value terms. There are 5,000 shares of stock outstanding. (HANDWRITTEN NEEDED)

	Market Value Balance Sheet
	RM		RM
Cash	16,000
Fixed assets	159,000	Equity	175,000
Total	175,000	Total	175,000

Required:

1. If the Paint Cart has announced that it is going to repurchase $4,350 worth of stock. What will the price of the stock be after this repurchase?

(5 marks)

(CLO2:PLO2:C2)

2. If the Paint Cart declare a four-for-one stock split. How many shares are outstanding now? What is the new par value per share?

(4 marks)

(CLO2:PLO2:C2)

3. Explain the meaning of the dividend clientele effect and why it is important.

(3 marks)

(CLO2:PLO2:C2)

4. You are the CEO of a non-dividend paying firm that currently has excess cash reserves. You have requested for an internal management meeting to present the planning of your company dividend policy. You know that the management team favors the commencement of a dividend program. You, however, oppose any dividend plan at this time. Write a good argument that you can use in the meeting to support your position.

(8 marks)

(CLO2:PLO2:C2)