Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The balance sheet for the Chrome Corp. is shown here in market value terms. There are 10,600 shares of stock outstanding Market Value Balance

image text in transcribed

The balance sheet for the Chrome Corp. is shown here in market value terms. There are 10,600 shares of stock outstanding Market Value Balance Sheet Cash Fixed Assets Total $27,200 $102,120 Equity $129,320 $129,320 Total $129,320 The company has declared a dividend of $0.61 per share. The stock goes ex-dividend tomorrow. Ignoring any tax effects, what is the stock selling for today? What will it sell for tomorrow? After the dividend, what will be the value of shares and of cash for an investor with 100 shares? Enter your answers rounded to 2 DECIMAL PLACES What is the stock selling for today? 12.20 0 Correct response: 12.20.01 What will the stock sell for tomorrow? 11.59 Correct response: 11.5910.01 What will be the value of the investor's shares after the stock dividend? 1159 Correct response: 1,15910.01 What will be the value of the investor's cash after the dividend? 61 Correct response: 61+0.01 Click "Verity" to proceed to the next part of the question. Note: This question has 3 parts, so you will be clicking Verify 3 times. Suppose that Chrome Corp. has announced it is going to repurchase stock instead of paying out dividends. What effect will the repurchase have on an Investor who currently holds 100 shares and sells 5 of those shares back to the company in the repurchase at the market price per share of $12.2 (.e., what are the values of the investor's shares and cash)? Enter your answers rounded to 2 DECIMAL PLACES. What will be the value of the investor's shares after the share repurchase? 1159 0 Correct response: 1,1590.01 What will be the value of the investor's cash after the share repurchase? 61 G Correct response: 6140.01 Click "Verity to proceed to the next part of the question. Suppose the company changes its mind and decides to issue a 16% stock dividend instead of issuing a cash dividend or a repurchase. How would this action affect a shareholder who owns 100 shares of the stock? Enter your answers rounded to 2 DECIMAL PLACES How many shares will the firm have after the stock dividend? Number What will be the price per share after the stock dividend? Number What will be the value of the investor's shares after the stock dividend? Number What will be the value of the investor's cash after the stock dividend? Number

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investment Analysis and Portfolio Management

Authors: Frank K. Reilly, Keith C. Brown

10th Edition

538482109, 1133711774, 538482389, 9780538482103, 9781133711773, 978-0538482387

More Books

Students also viewed these Finance questions