Question

In: Accounting

Net profit of Lily Fashion House Ltd in the current year is $2,575, 000. The company...

Net profit of Lily Fashion House Ltd in the current year is $2,575, 000. The company is planning to launch a project that will requires an investment of $745 000 next year. Today the company’s stock has market value of $22/share. Lily Fashion House has the current capital structure of 60% in equity and 40% in debt. Required:

  1. The company is paying a cash dividend of $4.50/share plus an extra-cash dividend of $1.5/share. Tomorrow the stock will go ex-dividend. Explain why there is ex-dividend date and ex-dividend price? Calculate the ex-dividend price tomorrow morning. Assuming the tax on dividend is 25%?
  2. How much dividend Lily Fashion House can pay its shareholders this year and what is dividend payout ratio of the company. Assume the Residual Dividend Payout Policy applies?
  3. Floral Textile Ltd. is a daughter company of the Lily Fashion House Group and currently under a liquidation plan due to severe business contraction caused by the COVID 19 pandemic. The company plans to pay total dividend of $3.5 million now and $ 8.5 million one year from now as a liquidating dividend. The required rate of return for shareholders is 13.5%. Calculate the current value of the firm’s equity in total and per share if the firm has 2.5 million shares outstanding?

Solutions

Expert Solution

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Net profit of Lily Fashion House Ltd in the current year is $2,575, 000. The company...
Net profit of Lily Fashion House Ltd in the current year is $2,575, 000. The company is planning to launch a project that will requires an investment of $745 000 next year. Today the company’s stock has market value of $22/share. Lily Fashion House has the current capital structure of 60% in equity and 40% in debt. Required: a. The company is paying a cash dividend of $4.50/share plus an extra-cash dividend of $1.5/share. Tomorrow the stock will go ex-dividend....
Question 6 (7 marks) Net profit of Lily Fashion House Ltd in the current year is...
Question 6 Net profit of Lily Fashion House Ltd in the current year is $2,575, 000. The company is planning to launch a project that will requires an investment of $745 000 next year. Today the company’s stock has market value of $22/share. Lily Fashion House has the current capital structure of 60% in equity and 40% in debt. Required: The company is paying a cash dividend of $4.50/share plus an extra-cash dividend of $1.5/share. Tomorrow the stock will go...
Compaq Ltd has a net income after tax of $2 000 000 for the year ended...
Compaq Ltd has a net income after tax of $2 000 000 for the year ended 30 June 2018. At the beginning of the period Compaq Ltd has 900 000 fully paid-up ordinary shares on issue. On 1 January 2018 Compaq Ltd had issued a further 300 000 fully paid-up ordinary shares at an issue price of $2.00. On 1 March 2018 Compaq Ltd made a one-for-five bonus issue of ordinary shares out of retained earnings. The last sale price...
Compaq Ltd has a net income after tax of $2 000 000 for the year ended...
Compaq Ltd has a net income after tax of $2 000 000 for the year ended 30 June 2018. At the beginning of the period Compaq Ltd has 900 000 fully paid-up ordinary shares on issue. On 1 January 2018 Compaq Ltd had issued a further 300 000 fully paid-up ordinary shares at an issue price of $2.00. On 1 March 2018 Compaq Ltd made a one-for-five bonus issue of ordinary shares out of retained earnings. The last sale price...
What is the firm's current year net profit margin?
Category Prior Year Current YearAccounts payable ??? ???Accounts receivable 320,715 397,400Accruals 40,500 33,750Additional paid in capital 500,000 541,650Cash 17,500 47,500Common Stock 94,000 105,000COGS 328,500 428,048.00Current portion long-term debt 33,750 35,000Depreciation expense 54,000 54,731.00Interest expense 40,500 41,017.00Inventories 279,000 288,000Long-term debt 339,670.00 401,877.00Net fixed assets 946,535 999,000Notes payable 148,500 162,000Operating expenses (excl. depr.) 126,000 161,905.00Retained earnings 306,000 342,000Sales 639,000 850,323.00Taxes 24,750 48,686.00What is the firm's current year net profit margin?
Alps Ltd has a net income after tax of $1 500 000 for the year ended...
Alps Ltd has a net income after tax of $1 500 000 for the year ended 30 June 2019. At the beginning of the period Alps Ltd has 900 000 fully paid-up ordinary shares on issue. On 1 December 2018 Alps Ltd had issued a further 300 000 fully paid-up ordinary shares at an issue price of $2.00. On 1 March 2019 Alps Ltd made a one-for-six bonus issue of ordinary shares out of retained earnings. The last sale price...
Honey Ltd had a total net profit of $9 million this year and 5 million common...
Honey Ltd had a total net profit of $9 million this year and 5 million common shares outstanding. It’s ordinary share is currently trading at $33. Honey Ltd has recently declared an 10% share bonus. a. Show the impact of this share bonus on the outstanding shares and current market share price. b. If instead of a share bonus, the management announces a 7 to 5 share spit. Demonstrate the impact of share split on the outstanding shares and current...
Lily and Morris are the directors and shareholders of Zap Graphics Pty Ltd. Recently, the company...
Lily and Morris are the directors and shareholders of Zap Graphics Pty Ltd. Recently, the company began to suffer cash flow problems and needed additional capital. Lily persuaded Rodney to invest $100,000 in Zap Graphics Pty Ltd. Lily and Morris held a directors’ meeting and decided to issue Rodney with two shares in the company. A general meeting of shareholders also appointed Rodney as a director of the company. The company’s financial position improved as a result of Rodney’s $100,000...
A company had a $51 000 net loss for 2015. A dividend of $19 000 was...
A company had a $51 000 net loss for 2015. A dividend of $19 000 was paid during the year and depreciation expense for 2015 was $14 000. The balance sheet records the following working capital accounts as below. Calculate whether this company generated any cash from its operations during 2015. 1 January 2015 ($) 31 December 2015   ($) Cash 12500 10500 Inventory 15000    9000 Prepayments     5000    2000 Accounts Receivable 11000 15000 Accounts Payable 10000 11000 Accruals...
Lily factory allows its departments to operate as autonomous units. Their results for the current year...
Lily factory allows its departments to operate as autonomous units. Their results for the current year were as follows:     Candy   Beverage   Packaging Revenues   $2,200,000   $670,000   $1,200,000 Current assets   320,000   112,000   535,000 Capital assets   765,000   488,000   1,320,000 Current liabilities   276,000   107,000   432,000 Net operating income   312,000   57,000   420,000 After-tax income   218,000   39,000   299,000 Weighted average cost of capital   7.5%   7.5%   7.5% Required: For each division compute the: 1.   Return on sales 2.   Return on investment based on total assets employed...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT