Health Systems Inc. is considering a 10 percent stock dividend. The capital accounts are as follows:
Health Systems Inc. is considering a 10 percent stock dividend. The capital accounts are as follows:
| Common stock (4,000,000 shares at $10 par) | $ | 40,000,000 |
| Capital in excess of par* | 25,000,000 | |
| Retained earnings | 45,000,000 | |
| Net worth | $ | 110,000,000 |
*The increase in capital in excess of par as a result of a stock dividend is equal to the shares created times (Market price – Par value).
The company’s stock is selling for $45 per share. The company had total earnings of $12,000,000 with 4,000,000 shares outstanding and earnings per share were $3.00. The firm has a P/E ratio of 15.
a) Assume Mr. Heart, the president of Health Systems, wishes to benefit stockholders by keeping the cash dividend at a previous level of $1.05 in spite of the fact that the stockholders now have 10 percent more shares. Because the cash dividend is not reduced, the stock price is assumed to remain at $45.
What is an investor’s total investment worth after the stock dividend if he/she had 90 shares before the stock dividend?
b) As a final question, what is the dividend yield on this stock under the scenario described in part e? (Input your answer as a percent rounded to 2 decimal places.)
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Health Systems Inc. is considering a 10 percent stock dividend. The capital accounts are as follows:
Health Systems Inc. is considering a 10 percent stock dividend. The capital accounts are as follows:...
Health Systems Inc. is considering a 10 percent stock dividend. The capital accounts are as follows: Common stock (4,000,000 shares at $10 par) $ 40,000,000 Capital in excess of par* 25,000,000 Retained earnings 45,000,000 Net worth $110,000,000 *The increase in capital in excess of par as a result of a stock dividend is equal to the shares created times (Market price – Par value). The company’s stock is selling for $45 per share. The company had total earnings of...
On October 10, the stockholders' equity of Sherman Systems appears as follows. Common stock-$10 par value,...
On October 10, the stockholders' equity of Sherman Systems appears as follows. Common stock-$10 par value, 97,000 shares authorized, issued, and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 970,000 341,000 1,064,000 $ 2,375,000 1. Prepare journal entries to record the following transactions for Sherman Systems. a. Purchased 7,500 shares of its own common stock at $50 per share on October 11. b. Sold 1,625 treasury shares on November 1 for $56...
On October 10, the stockholders’ equity of Sherman Systems appears as follows. Common stock–$10 par...
On October 10, the stockholders’ equity of Sherman Systems appears as follows. Common stock–$10 par value, 73,000 shares authorized, issued, and outstanding $ 730,000 Paid-in capital in excess of par value, common stock 221,000 Retained earnings 872,000 Total stockholders’ equity $ 1,823,000 1. Prepare journal entries to record the following transactions for Sherman Systems. Purchased 5,100 shares of its own common stock at $26 per share on October 11. Sold 1,025 treasury shares on November 1 for $32 cash...
Ace Products sells marked playing cards to blackjack dealers. It has not paid a dividend in...
Ace Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years, but is currently contemplating some kind of dividend. The capital accounts for the firm are as follows: Common stock (3,000,000 shares at $5 par) Capital in excess of par* Retained earnings Net worth $ 15,000,000 6,000,000 24,000,000 $ 45,000,000 *The increase in capital in excess of par as a result of a stock dividend is equal to the new shares created times...
On October 10, the stockholders’ equity of Sherman Systems appears as follows. Common stock–$10 par...
On October 10, the stockholders’ equity of Sherman Systems appears as follows. Common stock–$10 par value, 90,000 shares authorized, issued, and outstanding $ 900,000 Paid-in capital in excess of par value, common stock 306,000 Retained earnings 1,008,000 Total stockholders’ equity $ 2,214,000 1. Prepare journal entries to record the following transactions for Sherman Systems. Purchased 6,800 shares of its own common stock at $43 per share on October 11. Sold 1,450 treasury shares on November 1 for $49 cash...
On October 10, the stockholders' equity of Sherman Systems appears as follows. Common stock-$10 par value,...
On October 10, the stockholders' equity of Sherman Systems appears as follows. Common stock-$10 par value, 97,000 shares authorized, issued, and outstanding Paid-in capital in excess of par value, common stock Retained earnings $ 970,000 341,000 1,064,000 $2,375,000 Total stockholders' equity 1. Prepare journal entries to record the following transactions for Sherman Systems. G. Purchased 7,500 shares of its own common stock at $50 per share on October 11 b. Sold 1,625 treasury shares on November 1 for $56 cash...
Ace Products sells marked playing cards to blackjack dealers. It has not paid a dividend in...
Ace Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years, but is currently contemplating some kind of dividend. The capital accounts for the firm are as follows: Common stock (3,000,000 shares at $5 par) $ 15,000,000 Capital in excess of par* 6,000,000 Retained earnings 24,000,000 Net worth $ 45,000,000 *The increase in capital in excess of par as a result of a stock dividend is equal to the new shares created times...
On October 10, the stockholders' equity of Sherman Systems appears as follows. Common stock-$10 par value,...
On October 10, the stockholders' equity of Sherman Systems appears as follows. Common stock-$10 par value, 88,000 shares authorized, issued, and outstanding Paid-in capital in excess of par value, common stock 880,000 296,000 992,000 Retained earnings Total stockholders' equity $2,168,000 1. Prepare journal entries to record the following transactions for Sherman Systems. a. Purchased 6,600 shares of its own common stock at $41 per share on October 11 b. Sold 1,400 treasury shares on November 1 for $47 cash per...
On October 10, the stockholders' equity of Sherman Systems appears as follows: Common stock-$10 par value,...
On October 10, the stockholders' equity of Sherman Systems appears as follows: Common stock-$10 par value, 72,000 shares authorized, issued, and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 720,000 216,000 864,000 $ 1,800,000 1. Prepare journal entries to record the following transactions for Sherman Systems. a. Purchased 5,000 shares of its own common stock at $25 per share on October 11. b. Sold 1,000 treasury shares on November 1 for $31...
On October 10, the stockholders’ equity of Sherman Systems appears as follows. Common stock–$10 par value,...
On October 10, the stockholders’ equity of Sherman Systems appears as follows. Common stock–$10 par value, 91,000 shares authorized, issued, and outstanding $ 910,000 Paid-in capital in excess of par value, common stock 311,000 Retained earnings 1,016,000 Total stockholders’ equity $ 2,237,000 1. Prepare journal entries to record the following transactions for Sherman Systems. Purchased 6,900 shares of its own common stock at $44 per share on October 11. Sold 1,475 treasury shares on November 1 for $50 cash per...
On October 10, the stockholders' equity of Sherman Systems appears as follows. Common stock-$10 par value, 97,000 shares authorized, issued, and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 970,000 341,000 1,064,000 $ 2,375,000 1. Prepare journal entries to record the following transactions for Sherman Systems. a. Purchased 7,500 shares of its own common stock at $50 per share on October 11. b. Sold 1,625 treasury shares on November 1 for $56...
Ace Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years, but is currently contemplating some kind of dividend. The capital accounts for the firm are as follows: Common stock (3,000,000 shares at $5 par) Capital in excess of par* Retained earnings Net worth $ 15,000,000 6,000,000 24,000,000 $ 45,000,000 *The increase in capital in excess of par as a result of a stock dividend is equal to the new shares created times...
On October 10, the stockholders' equity of Sherman Systems appears as follows. Common stock-$10 par value, 97,000 shares authorized, issued, and outstanding Paid-in capital in excess of par value, common stock Retained earnings $ 970,000 341,000 1,064,000 $2,375,000 Total stockholders' equity 1. Prepare journal entries to record the following transactions for Sherman Systems. G. Purchased 7,500 shares of its own common stock at $50 per share on October 11 b. Sold 1,625 treasury shares on November 1 for $56 cash...
On October 10, the stockholders' equity of Sherman Systems appears as follows. Common stock-$10 par value, 88,000 shares authorized, issued, and outstanding Paid-in capital in excess of par value, common stock 880,000 296,000 992,000 Retained earnings Total stockholders' equity $2,168,000 1. Prepare journal entries to record the following transactions for Sherman Systems. a. Purchased 6,600 shares of its own common stock at $41 per share on October 11 b. Sold 1,400 treasury shares on November 1 for $47 cash per...
On October 10, the stockholders' equity of Sherman Systems appears as follows: Common stock-$10 par value, 72,000 shares authorized, issued, and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 720,000 216,000 864,000 $ 1,800,000 1. Prepare journal entries to record the following transactions for Sherman Systems. a. Purchased 5,000 shares of its own common stock at $25 per share on October 11. b. Sold 1,000 treasury shares on November 1 for $31...
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