Question

V Hewlard Pocket's market value balance sheet is given. Assets A. Original balance sheet Liabilities and Shareholders' Equity Cash $ 150,000 Debt Other assets 950,000 Equity Value of firm $ 1,100,000 Value of firm Shares outstanding - 100,000 Price per share = $1,100,000 / 100,000 - $11 $ 1,100,000 $1,100,000 Pocket needs to hold on to $88,000 of cash for a future investment. Nevertheless, it decides to pay a cash dividend of $2.50 per Share and to replace cash as needed with a new issue of shares. After the dividend is paid and the new stock Is Issued: 9. What will be the price per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) - What will be the total value of the company? (Enter your answers in whole dollars, not in millions.) E. What will be the total value of the stock held by new investors? (Enter your answers in whole dollars, not in millions. Do notre ntermediate calculations. Round your answer to the nearest whole dollar amount.) 1. What will be the wealth of the existing investors including the dividend payment? (Enter your answers in whole dollars, not in millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) per share a. Price b. Total value of the company c. Total value of the stock held by new investors d. Existing shareholder wealth < Prev 4 of 8 Next >

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

C w ? ENG 07:25 01-08-2020 70 35 Х EO184 . EH EI EJ EK EL EM EN EO EP EQ ER ES ET EU EV 184 hewlard pocket 185 186 187 188 189 190 less less cash available = cash needed for investment = amount of dividend = amount of shares to be issued = 150000 88000 250000 [2.50 x 100000] 188000 no of shares to be issued = 17090.91 a 191 192 193 194 195 196 197 198 199 200 201 price per share after dividend and new issue = price per share after dividend and new issue = price per share after dividend and new issue = (other assets + cash for investment)/total no of shares (950000+ 88000)/(100000+ 17090.91) 8.864907 8.86 b Total value of the company = 1038000 (8.864907 x 117090.91] с Total value of stock held by new investors = 151509 [8.864907 x 17090.91] 202 d wealth of existing investors = dividend share value 250000 [2.50 x 100000] 886491 [8.864907 x 100000] 1136491 203 204 205 206 207 Dan HEDGE INTL CAP BUD Sheet11 SANDRINE LEASING PORTFOLOQ DIR right clean YIELD bond portfolio RESI DIV POLICY SPE ... +