Exam 13: Dividends, repurchases, and Splits

The Pawtucket Brewery uses the residual dividend model to set its dividends.Selected financial information for Pawtucket is provided in the table below.What is Pawtucket's dividend per share? Selected Financial Information Pawtucket Brewery

Ripper Filtration Inc.designs domestic water filters that remove fluoride.Selected financial data is provided in the table below.Ripper is trying to set the dividend for the Year 2 using the target payout model. Selected Financial Information Ripper Filtration Inc.

Acme Explosives Inc.is an international producer of creative demolition products.Acme is all equity financed.Acme has too much cash,which it wants to distribute to its shareholders.Selected financial information for Acme is provided in the table.David Wylie is a director at Acme.Next Friday the board is meeting to vote on the format of the distribution.There are three choices on the ballot: 1)an extra dividend of $4 per share; 2)a stock dividend of 0.5 shares for each existing share; or 3)an open market stock repurchase to buy 28.5% of shares outstanding at a price of $14.04.As part of his compensation package,David has options to purchase one million shares at a price of $12 per share.If David's sole concern is his own wealth,then how should he vote at the board meeting? Selected Financial Information For Acme Corporation

Random Dating Corp.operates a number of online dating services such as truelove.com,hookup.com and rebound.com.Random sets its dividend using the target payout ratio policy.Selected financial data for Random is provided in the table below.Random is trying to set the dividend for the coming year (Year 2).What dividend should be offered if EPS is expected to remain at $1.80? Selected Financial Information Random Dating Corp. Year 1

Dinder Mufflin is a Pennsylvania-based paper company.Dinder Mufflin is all equity financed.Its shares are trading for $7.67 and it has 433 million shares outstanding.The company has excess cash of $831.36 million that it wants to distribute using a fixed-price tender offer.It has announced that it will pay $9.60 per share and that it seeks to buy back 20% of outstanding shares.What will the stock price be after the repurchase?

Smith Motors Inc.manufactures,distributes,and services automotive parts and engines worldwide.Smiths' income statement for the year just ending is shown below.What was Smith Motors' dividend payout rate in Year 1? Smith Motors Inc. Income Statement Year 1 ($000,000's)

Some investors think that the Rumple Shirt Co.'s repurchase program was a bad deal for shareholders,because the company paid too much for its repurchased shares.Before the repurchase,the company's shares traded for $30.Over the last quarter,Rumple repurchased 150 million shares (15% of shares outstanding)at an average price of $33 per share.Shares outstanding are now 850M.Calculate the stock price after the repurchase.If you bought 100 shares prior to the repurchase,and sold the same percentage of shares as Rumple repurchased (for the same price they paid),then what is your profit (loss)on the investment? (Assume that you sold the non-repurchased shares at the post-repurchase price.)

Acme Explosives Inc.is an international producer of creative demolition products.Selected financial information for Acme is provided in the table below.Acme wants to distribute all of its cash with a special dividend.The stock price and market capitalization of the company immediately after the announcement are shown in the table.What price will the stock trade at on the ex-dividend day? Selected Financial Information For Acme Corporation

B&O Railroad Inc.transports industrial products and supplies throughout the North Eastern United States.Selected financial information for B&O is provided in the table below.B&O is considering a stock dividend of 5%.What will earnings-per-share be after the dividend? B&O Railroad Inc. Selected Financial Information

Frank Castanza owns 100 shares in a weapons company called Guns-R-Us.Frank brags about its steady,annual dividend of $1.25 per share.You are jealous of the dividend but philosophically opposed to weapons companies,so you can't buy the stock.Instead,you have identified the Paper Street Soap Factory (PSSF)which is developing a new biodegradable bath soap.The company plans to begin paying an annual dividend of $1.25 starting in two years.Stockholders in both companies require a return of 7.5%.A stock price and dividend forecast for the two companies is provided in the table.(Assume that dividends are paid in perpetuity.)Your plan is to buy shares in PSSF today,sell some at Year 1 and hold the remainder in perpetuity.How many shares do you have to buy today in order to earn the same annual income as Frank?

On January 1,Year 1 you bought 100 shares of Universal Exports Inc.It is now January 1 of Year 2.You have recorded stock price and dividend information for Universal in the table,below.You want to calculate your return on the investment.After digging through your records you realize that Universal executed a 3-for-1 stock split late in Year 1.Use this information to adjust the data in the table and calculate the split-adjusted annual return on the investment in Universal shares. Selected Financial Data Universal Exports Inc.

B&O Railroad Inc.transports industrial products and supplies throughout the North Eastern United States.Selected financial information for B&O is provided in the table below.B&O is considering a stock dividend of 7.5%.What will the stock price be after the dividend (Assuming no other changes)? B&O Railroad Inc. Selected Financial Information

Sloburn Barbeques Inc.uses the residual dividend model to set its dividends.Selected financial information for Sloburn is provided in the table below. Selected Financial Information Sloburn Barbeques Inc. How much additional funds did Sloburn need to borrow in order to finance its new investments?

Spacely Sprockets Inc.sets its dividend using the target payout ratio policy.Selected financial data for Spacely is available in the table below.What is Spacely's target payout rate? Selected Financial Information Spacely Sprockets Inc.

What is Sterling Draper Pryce's quarterly dividend growth rate? The recent dividend history for Sterling Draper Pryce is provided in the table,below.

Santa Fe Railway transports industrial products and supplies throughout the Western United States.Selected financial information for Santa Fe is provided in the table below.The CFO of Santa Fe,Richard Pennybags,wants to distribute $1B of cash using an open market stock repurchase.If the shares are bought back at the pre-repurchase price,then what proportion of shares will be repurchased? Santa Fe Railway Selected Financial Information

Some investors think that Prestige Entertainment's repurchase program was a bad deal for shareholders,because the company paid too much for its repurchased shares.Over the last quarter,Prestige repurchased 717.16 million shares at an average price of $17.35 per share.Shares outstanding are now 11,235.51M and the stock price is $12.01,which analysts regard as its fair value.What price was Prestige trading for before the repurchase?