The net income of Steel City Corporation is $$87,000.$ The company has $29,000$

outstanding shares, and a $100$ percent payout policy. The expected value of the firm one

year from now is $$1,765,000.$ The appropriate discount rate is $13$ percent, and there are

no taxes.

a$.$ What is the current value of the company assuming the current dividend has not yet

been paid? $($Do not round intermediate calculations and round your answer to $2$

decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$ What is the ex$-$dividend price of the company's stock if the board follows its current

policy? $($Do not round intermediate calculations and round your answer to $2$

decimal places, e$.$g$.,32\mathrm{.}16.)$

At the dividend declaration meeting, several board members claimed that the dividend is

too meager and is probably depressing the company's stock price. They proposed that

the company sell enough new shares to finance a dividend of $$4\mathrm{.}20.$

c$-1.$ Calculate the value of the company under this proposal. $($Do not round

intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

If the proposal is adopted, at what price will the new shares sell? How many shares

c$-2.$ will be sold? $($Do not round intermediate calculations and round your answers to $2$

decimal places, e$.$g$.,32\mathrm{.}16.)$

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