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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
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:
- 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)
- 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)
- Explain the meaning of the dividend clientele effect and why it is important.
(3 marks)
(CLO2:PLO2:C2)
- 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)
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