2010-10-07_213733_sand

2010-10-07_213733_sand - Axel Telecommunications has a...

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Axel Telecommunications has a target capital structure that consists of 70% debt and 30% equity. The company anticipates that its capital budget for the upcoming year will be $5,000,000. If Axel reports net income of $4,000,000 and it follows a residual dividend payout policy, what will be its dividend payout ratio? 70% Debt; 30% Equity; Capital budget = $5,000,000; NI = $4,000,000; PO = ? Equity retained = 0.3($5,000,000) = $1,500,000. NI $4,000,000 – Additions to RE 1,500,000 Earnings remaining $2,500,000 Payout = $2,500,000 = 62.5% $4,000,000 #2 Gamma Medical’s stock trades at $100 a share. The Company is contemplating a 5-for-3 stock split. Assuming that the stock split will have no effect on the market value of its equity, what will be the company’s stock price following the stock split? P 0 = $100; Split = 3 for 2; New P 0 = ? $100 = $66.67. 3/2 #3 Beta Industries has net income of $3,000,000 and it has 2,000,000 shares of common stock outstanding. The company’s stock currently trades at $30 per share.
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2010-10-07_213733_sand - Axel Telecommunications has a...

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