Question

In: Finance

Consider the following simplified financial statements for the Phillips Corporation (assuming no income taxes):   Income Statement...

Consider the following simplified financial statements for the Phillips Corporation (assuming no income taxes):
  Income Statement Balance Sheet
  Sales $27,000     Assets $10,800     Debt $4,600  
  Costs 12,800     Equity 6,200  
  Net income

$14,200  

   Total

$10,800  

   Total

$10,800  
Phillips has predicted a sales increase of 10 percent. It has predicted that every item on the balance sheet will increase by 10 percent as well.
Required:
Calculate the dividend paid. (Do not round your intermediate calculations.)


Multiple Choice

  • $15,000

  • $14,969

  • $14,975

  • $14,981

  • $23,740

Solutions

Expert Solution

Net income next year = $14,200 * 1.10 = $15,620

Equity next year = $6,200 * 1.10 = $6,820

Equity next year = Equity today + Net income next year - Dividend paid

$6,820 = $6,200 + $15,620 - Dividend paid

Dividend paid = $6,200 + $15,620 - $6,820

Dividend paid = $15,000

jeff jeffy answered 2 years ago
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