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Phillips Rock and Mud is trying to determine the maximum amount of cash dividends it can...

Phillips Rock and Mud is trying to determine the maximum amount of cash dividends it can pay this year. Assume its balance sheet is as follows:


  
Assets
  Cash $ 410,000
  Accounts receivable 806,000
  Fixed assets 1,007,000
  
        Total assets $ 2,223,000
  
Liabilities and Stockholders' Equity
  Accounts payable $ 542,000
  Long term payable 307,000
  Common stock (305,000 shares at $2 par) 610,000
  Retained earnings 764,000
  
        Total liabilities and stockholders' equity $ 2,223,000
  


a-1. From a legal perspective, what is the maximum amount of dividends per share the firm could pay? (Do not round intermediate calculations and round your answer to 2 decimal places.)

Dividends per share $2.50


a-2. Is this realistic?
  

   Yes
X No


b. In terms of cash availability, what is the maximum amount of dividends per share the firm could pay? (Do not round intermediate calculations and round your answer to 2 decimal places.)
  

Dividends per share $1.34


c. Assume the firm earned an 15 percent return on stockholders’ equity last year. If the board wishes to pay out 40 percent of earnings in the form of dividends, how much will dividends per share be? (Do not round intermediate calculations and round your answer to 2 decimal places.)

*** Need answer to this portion only ***

Dividends per share : $   

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