A firm has $750 comma 000750,000 in paid-in capital, retained earnings of $36 comma 00036,000 (including...
A firm has
$750 comma 000750,000
in paid-in capital, retained earnings of
$36 comma 00036,000
(including the current year's earnings), and
30 comma 00030,000
shares of common stock outstanding. In the current year, it has
$24 comma 00024,000
of earnings available for the common stockholders.
a. What is the most the firm can pay in cash dividends to each common stockholder? (Assume that legal capital includes all paid-in capital.)
b. What effect would a cash dividend of
$1.171.17
per share have on the firm's balance sheet entries?
c. If the firm cannot raise any new funds from external sources, what do you consider the key constraint with respect to the magnitude of the firm's dividend payments?
a. If legal capital is assumed to include all paid-in capital, the most the firm can pay in cash dividends to each common stockholder is
$nothing .
(Round to the nearest cent.)
Homework Answers
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A firm has
$750 comma 000750,000
in paid-in capital, retained earnings of
$36 comma 00036,000
(including...
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