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Hewlard Pocket’s market value balance sheet is given. Assets Liabilities and Shareholders’ Equity A. Original balance...
Hewlard Pocket’s market value balance sheet is given.
| Assets | Liabilities and Shareholders’ Equity | ||||||||||||
| A. Original balance sheet | |||||||||||||
| Cash | $ | 150,000 | Debt | $ | 0 | ||||||||
| Other assets | 950,000 | Equity | 1,100,000 | ||||||||||
| Value of firm | $ | 1,100,000 | Value of firm | $ | 1,100,000 | ||||||||
| Shares outstanding = 100,000 | |||||||||||||
| Price per share = $1,100,000 / 100,000 = $11 | |||||||||||||
Pocket needs to hold on to $84,000 of cash for a future investment. Nevertheless, it decides to pay a cash dividend of $2.30 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:
a. What will be the price per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b. What will be the total value of the company? (Enter your answers in whole dollars, not in millions.)
c. What will be the total value of the stock held by new investors? (Enter your answers in whole dollars, not in millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
d. 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.)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Hewlard Pocket’s market value balance sheet is given. Assets Liabilities and Shareholders’ Equity A. Original balance...
Hewlard Pocket’s market value balance sheet is given.
Assets
Liabilities and Shareholders’
Equity
A. Original balance sheet
Cash
$
150,000
Debt
$
0
Other assets
950,000
Equity
1,100,000
Value of firm
$
1,100,000
Value of firm
$
1,100,000
Shares outstanding = 100,000
Price per share = $1,100,000 / 100,000 = $11
Pocket needs to hold on to $52,000 of cash for a future
investment. Nevertheless, it decides to pay a cash dividend of
$2.10 per share and to replace cash...
define balance sheet assets liabilities equity
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A financial institution has the following market value balance sheet structure: Assets Liabilities and Equity Cash...
A financial institution has the following market value balance
sheet structure:
Assets
Liabilities and Equity
Cash
$
1,400
Certificate of deposit
$
10,400
Bond
10,400
Equity
1,400
Total assets
$
11,800
Total liabilities and equity
$
11,800
a. The bond has a 10-year maturity, a fixed-rate
coupon of 10 percent paid at the end of each year, and a par value
of $10,400. The certificate of deposit has a 1-year maturity and a
6 percent fixed rate of interest. The...
A financial institution has the following market value balance sheet structure: Assets Liabilities and Equity Cash...
A financial institution has the following market value balance
sheet structure:
Assets
Liabilities and Equity
Cash
$
2,400
Certificate of deposit
$
11,400
Bond
10,200
Equity
1,200
Total assets
$
12,600
Total liabilities and equity
$
12,600
a. The bond has a 10-year maturity, a fixed-rate
coupon of 12 percent paid at the end of each year, and a par value
of $10,200. The certificate of deposit has a 1-year maturity and a
6 percent fixed rate of interest. The...
Consider a simple firm that has the following market-value balance sheet: Assets Liabilities end equity $...
Consider a simple firm that has the following market-value
balance sheet: Assets Liabilities end equity $ 1 020 Debt $ 430
Equity 590 Next year, there are two possible values for its
assets, each equally likely: $ 1 200 and $ 970. Its debt will be
due with 4.8 % interest. Because all of the cash flows from the
assets must go to either the debt or the equity, if you hold a
portfolio of the debt and equity in...
1. The balance sheet consists of assets and liabilities and equity. With a focus on liabilities,...
1. The balance sheet consists of assets and liabilities and
equity. With a focus on liabilities, discuss the connectedness of
these three components.
2. Discuss the components needed to determine the present value
of a noncurrent liability.
3. Discuss the relationship between the income statement and the
shareholders' equity section of the balance sheet.
4. Discuss the purpose of other comprehensive income and
accumulated other comprehensive income.
5. Compare and contrast book value per share and market
capitalization.
6. Evaluate...
Create a balance sheet (assets, liabilities, equity, liabilities + equity) for Tech Co using the following...
Create a balance sheet (assets, liabilities, equity, liabilities
+ equity) for Tech Co using the following information:
Adjusted Trial Balance
As of December 31, 2014
Debits
Credits
Cash
278,554,562
Accounts Receivable
128,102,723
Allowance for Doubtful Accounts
5,764,623
Inventory
1,438,773,206
Merchandise Purchases
2,363,146,864
Buildings
198,895,751
Accumulated Depreciation - Building
84,843,130
Equipment
104,891,998
Accumulated Depreciation - Equipment
42,768,575
Trademark
80,000
Accounts Payable
1,243,547,398
Interest Payable
2,258,179
Taxes Payable
9,015,728
Notes Payable
160,391,997
Bonds Payable
200,000
Premium on Bonds Payable
3,600
Dividends Payable...
Think about this: assets equal liabilities plus equity. This is the balance sheet and if it...
Think about this: assets equal liabilities plus equity. This is
the balance sheet and if it balances, and you’ve audited it, then
the income statement must be reasonably stated. Right? What’s the
point in auditing the income statement if you’ve audited everything
else on the balance sheet – and it all balances. In fact, you’ve
probably noticed that the focus of all the audit work we’ve studied
has been on the balance sheet. Please consider and discuss the
reasons why...
If the balance sheet of a firm indicates that total assets exceed current liabilities plus shareholders'...
If the balance sheet of a firm indicates that total assets
exceed current liabilities plus shareholders' equity, then the firm
must have:
a. no retained earnings.
b. long-term debt.
c. no accumulated depreciation.
d. current assets.
e. None of the above
Corporations are referred to as public companies when their:
a. shareholders have no tax liability.
b. shares are held by the federal or state government.
c. stock is publicly traded.
d. products or services are available to the public....
Higginbotham, INC Balance Sheet ($000) Assets Liabilities and Stockholder’s Equity Cash
Higginbotham, INC
Balance Sheet ($000)
Assets
Liabilities and Stockholder’s Equity
Cash
$ 1,500
Marketable
Securities
2,500
Accounts
Receivable
15,000
Inventory
33,000
Tot. Curr.
Assets
$52,000
Fixed Assets
(net)
35,000
Total
Assets
$87,000
Accounts
Payable
$12,500
Notes
Payable
12,500
Tot. Current
Liab.
$25,000
Long-term
Debt
22,000
Total
Liabilities
$47,000
Common Stock
(par)
5,000
Paid-in
Capital
18,000
Retained
Earnings
17,000
Total Stock
Equity
$40,000
Tot Liab. And Stockholder
Equity
$87,000
Higginbotham, INC
Income Statement ($000)...
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