Deck 13: Dividends, repurchases, and Splits

Question 1

Last month,Springfield Power Co.announced that shareholders of record on this coming Friday will receive a dividend of $4.5 per share.(Assume that the dividend will also be paid on Friday.)After this Friday,the next dividend is expected in one year's time.Dividends are expected to be paid annually in perpetuity and are expected to grow at a rate of 5%.Shareholders require a 13% return on equity.What is the stock price of Springfield Power on Wednesday? (Preceding the Friday Day of Record.)

A) $36.35
B) $43.91
C) $49.06
D) $56.25
E) $59.06

Answer 1

$59.06

Question 2

Smith Motors Inc.manufactures,distributes,and services automotive parts and engines worldwide.Smiths' income statement for the year just ending is shown below.Assume that today is the first day of Year 2 and that Smith's common shares are trading at a price of $68.In its most recent Management Discussion and Analysis (MD&A)Smith's management forecast earnings-per-share of $6 for Year 2.If Smith maintains its Year 1 payout ratio,then what will the dividend (per share)be in Year 2?
Smith Motors Inc.
Income Statement
Year 1 ($000,000's)

A) $0.77
B) $1.06
C) $1.44
D) $1.86
E) $2.06

Answer 2

$1.06

Question 3

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?

A) 93
B) 100
C) 107.5
D) 116.67
E) 125

Answer 3

107.5

Question 4

GNB Inc.sets its dividend using the target payout model.Using the data in the table,below,calculate the dividend for Year 1.
Selected Financial Information
GNB Inc.

A) $1.296
B) $1.397
C) $1.436
D) $1.438
E) $1.446

Question 5

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.

A) $0.55
B) $0.57
C) $0.59
D) $0.64
E) $0.68

Question 6

Last month,Springfield Power Co.announced that shareholders of record on this coming Friday will receive a dividend of $2.75 per share.(Assume that the dividend will also be paid on Friday.)After this Friday,the next dividend is expected in one year's time.Dividends are expected to be paid annually in perpetuity and are expected to grow at a rate of 5%.Shareholders of Springfield Power Co.require a 12.5% return on equity.What is the stock price of Springfield Power on Tuesday? (Preceding the Friday Day of Record.)

A) $32.00
B) $37.66
C) $41.25
D) $43.91
E) $46.25

Question 7

Wayne Enterprises Inc.has a target debt/equity ratio of 0.1765.Its capital budget (for new projects)for next year is estimated at $110 million.Estimated net income is $100 million.Wayne Enterprises has 100 million shares outstanding.Find Wayne Enterprises dividends using the residual dividend approach.

A) $0.035
B) $0.045
C) $0.055
D) $0.065
E) $0.075

Question 8

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?

A) $0
B) $10 M
C) $20 M
D) $7.5 M
E) $40 M

Question 9

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

A) $0.74
B) $0.95
C) $1.28
D) $1.66
E) $2.03

Question 10

Morty Seinfeld owns 100 shares in a tobacco company called Tarbox.Morty brags about its steady,annual dividend of $1.25 per share.You are jealous of the dividend but philosophically opposed to "sin" 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 three years.Stockholder in both companies require a return of 8%.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,some at Year 2 and then hold the remainder in perpetuity.How many shares do you have to buy today in order to earn the same annual income as Morty?

A) 100.00
B) 108.00
C) 108.64
D) 116.00
E) 116.64

Question 11

Slate Rock and Gravel Co.sets its dividend using the target payout ratio policy.Selected financial data for Slate is available in the table below.What dividend should Slate Rock and Gravel offer for the coming year (Year 2)if it uses an adjustment factor of 1.0?
Selected Financial Information
Slate Rock and Gravel Co.
Year 1

A) $0.55
B) $0.62
C) $0.90
D) $0.93
E) $1.00

Question 12

On Thursday,February 7,Baretta Pistols Inc.declared a $0.75 per share dividend to be paid on Monday,April 15; the date of record will be Thursday,March 18.Baretta's stock closed $17.25 on the last cum-dividend date.What will the opening price be on the ex-dividend date? (Assume perfect markets.)

A) $15.75
B) $16.50
C) $17.50
D) $17.25
E) $18.00

Question 13

Sweetums Inc.,a confectioner best known for its mint ogre balls,uses the residual dividend model to set its dividends.Selected financial information for Sweetums Inc.is provided in the table below.Given the investment plan summarized in the table,how much new debt will it have to take on in order to maintain its target capital structure?
Selected Financial Information
Sweetums Inc.

A) $30 million
B) $40 million
C) $60 million
D) $90 million
E) $100 million

Question 14

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)

A) 12.79%
B) 13.07%
C) 14.80%
D) 17.50%
E) 19.95%

Question 15

Gecko & Co.uses the residual dividend model to set its dividends.Selected financial information for Gecko is provided in the table below.
Selected Financial Information
Gecko & Co.

What is Gecko's capital structure weight for equity?

A) 0.30
B) 0.40
C) 0.50
D) 0.60
E) 0.70

Question 16

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.

A) 0.40
B) 0.50
C) 0.60
D) 0.70
E) 0.80

Question 17

Sweetums Inc.,a confectioner best known for its chocolate ogre balls,uses the residual dividend model to set its dividends.Selected financial information for Sweetums Inc.is provided in the table below.Sweetums Inc.has many new project opportunities and so has decided to cancel its dividend this year.What is the most that it can invest in new projects using only internal equity and maintaining its target capital structure weight for equity?
Selected Financial Information
Sweetums Inc.

A) $54 million
B) $90 million
C) $100 million
D) $110 million
E) $150 million

Question 18

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

A) $0.36
B) $0.40
C) $0.45
D) $0.55
E) $1.00

Question 19

Kelly Varnsen,a junior financial analyst at Vandalay Industries,has been asked to calculate this year's dividend.Kelly has gathered the following data:
CAPEX (spending on fixed assets)= $17,000
Increase in net working capital = $3,000
Target capital structure is 20% debt and 80% equity
Net income is = $17,000.
If Vandalay follows a residual dividend policy,then the dividend payout rate this year is:

A) 20%
B) 25%
C) 30%
D) 35%
E) 40%

Question 20

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

A) -$0.18
B) $0
C) $0.18
D) $0.25
E) $0.36

Question 21

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?

A) $11.28
B) $12.01
C) $12.33
D) $13.06
E) $14.03

Question 22

Smith Motors Inc.manufactures,distributes,and services automotive parts and engines worldwide.Smith's income statement for the year just ending is shown below.Assume that today is the first day of Year 2 and that Smith's common shares are trading at a price of $88.In its most recent Management Discussion and Analysis (MD&A)Smith's management forecast earnings-per-share of $7.5 for Year 2.If Smith maintains its Year 1 payout ratio,then what is the dividend yield (based on forecasted earnings)?
Smith Motors Inc.
Income Statement
Year 1 ($000,000's)

A) 0.88%
B) 1.32%
C) 1.51%
D) 1.76%
E) 2.62%

Question 23

You are a buy-side analyst researching the Gorilla Glass Co.Gorilla plans to borrow $11 million by issuing bonds with an annual coupon of 7% and a yield to maturity of 7%.Gorilla will use the borrowed money to repurchase shares on the open market at $40 per share.You have gathered the information,shown in the table,regarding the company prior to the repurchase.You estimate that EBIT for Year 1 will be the same as reported for Year 0.Assume that the money is borrowed and the repurchase is executed at the beginning of Year 1.
Gorilla Glass Co.
Dec 31,Year 0

What is the Year 1 EPS?

A) $2.00
B) $2.28
C) $2.80
D) $3.25
E) $3.52

Question 24

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

A) $22.91
B) $23.55
C) $26.33
D) $28.09
E) $31.11

Question 25

Ewing Oil repurchased $5.10B worth of shares during the year at an average price of $30.Cliff Barnes owned 0.15B shares in Ewing prior to the repurchase.Cliff decided not to sell any shares during the repurchase.What was Cliff's proportionate ownership in Ewing following the repurchase?
Ewing Oil Inc.
Selected Financial Information

A) 8.43%
B) 9.32%
C) 10.42%
D) 11.54%
E) 12.32%

Question 26

Cash-2-Day currently trades for $13.Analysts regard it as fairly valued at its current price.The company has announced that it intends to spend $180 million on an open market repurchase.Management claims that the company's shares are occasionally undervalued and that buying shares at undervalued prices represents a good investment.Assume that the company is able to repurchase shares at a price of $12.There are 275 million shares outstanding prior to the repurchase.What stock price prevails after the repurchase?

A) $9.00
B) $10.77
C) $12.06
D) $13.06
E) $15.60

Question 27

Cash-2-Day Company currently trades for $20.Analysts regard it as fairly valued at its current price.The company has announced that it intends to spend $200.10 million on an open market repurchase.Assume that the company is able to repurchase shares at a price of $15.There are 400 million shares outstanding prior to the repurchase.What fraction of shares does the company repurchase?

A) 3.34%
B) 4.35%
C) 5.35%
D) 6.35%
E) 7.35%

Question 28

Tarbox Tobacco Inc.is an all equity company with 100M shares outstanding.Tarbox's stock last closed at $15.Tarbox has too much cash.The CEO,Walt Raleigh,wants to distribute the excess cash with an open market stock repurchase.He is contemplating buying back $225M worth of shares at a price of $15.Leaf Erickson owns 2 million shares in Tarbox.He purchased his shares before the repurchase for $15.If Leaf does not sell any shares during the repurchase,then what is his proportionate ownership afterwards?

A) 0.020
B) 0.022
C) 0.024
D) 0.026
E) 0.028

Question 29

The CEO of Trans World Airlines (TWA),Jack Frye,wants to distribute $1B of cash by issuing a special dividend.Selected financial information for TWA is provided in the table below.Mr.Frye owns 51% of the common shares of TWA before the extra dividend.What is his total wealth in cash and shares after the special dividend?
Trans World Airlines
Selected Financial Information

A) $3,800.3M
B) $4,058.4M
C) $4,288.4M
D) $4,798.5M
E) $5,900.7M

Question 30

Cripple Creek Distilleries Inc.is an all equity company with 20M shares outstanding.It's stock last closed at $20.Cripple Creek has too much cash.The CEO,Levon Helm,wants to distribute the excess cash with an open market stock repurchase.He is contemplating buying back $5M worth of shares at a price of $20.What will the stock price be after completion of the repurchase?

A) $19.00
B) $19.25
C) $19.50
D) $19.75
E) $20.00

Question 31

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?

A) $5.2083
B) $7.1875
C) $9.5875
D) $11.9875
E) $13.1875

Question 32

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

A) Extra Dividend
B) Stock Repurchase
C) Stock Dividend

Question 33

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

A) 0.281%
B) 0.381%
C) 0.481%
D) 0.581%
E) 0.681%

Question 34

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.)

A) -$52.94
B) -$26.02
C) $0
D) $45
E) $300

Question 35

Smith Motors Inc.manufactures,distributes,and services automotive parts and engines worldwide.Smith's income statement for the year just ending is shown below.Assume that today is the first day of Year 2 and that Smith's common shares are trading at a price of $88.In its most recent Management Discussion and Analysis (MD&A)Smith's management forecast earnings-per-share of $5 for Year 2.If Smith maintains its Year 1 dividend per share in Year 2,then what will its Year 2 payout ratio be?
Smith Motors Inc.
Income Statement
Year 1 ($000,000's)

A) 25.3%
B) 26.3%
C) 27.3%
D) 28.3%
E) 29.3%

Question 36

On Friday,January 4,Oceanic Airlines declared a $0.75 per share dividend to be paid on Monday,March 11; the date of record will be Friday,February 15.What is Oceanic's ex-dividend date?

A) Monday
B) Tuesday
C) Wednesday
D) Thursday
E) Friday

Question 37

Initek Co.'s stock trades for $12.50.Initek has too much cash.The CEO,Bill Lumberg,wants to distribute the excess cash with an open market stock repurchase.He is contemplating buying back $5.45M worth of shares at a price of $12.50.Initek is an all equity company with 20M shares outstanding.Pete Gibb owns 2 million shares in Initek.He purchased his shares before the repurchase for $12.50.If Pete sells the same proportion of shares as the company repurchases (and receives the same price that they pay),then what is his change in wealth from before to after the repurchase?

A) -$2.500 million
B) -$1.250 million
C) $0
D) $2.500 million
E) $12.50 million

Question 38

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.Before the repurchase,the company's shares traded for $13.15.Over the last quarter,Prestige repurchased 804.22 million shares (7% of shares outstanding)at an average price of $15.066 per share.Shares outstanding are now 10,684.64M.Calculate the stock price after the repurchase.If you bought 100 shares prior to the repurchase and sold those shares afterwards,then what is your profit (loss)on the investment?

A) -$15.00
B) -$14.00
C) -$13.00
D) $0.00
E) $13.01

Question 39

Climax Motors Corp.is an all equity company with 40M shares outstanding.Climax's stock trades for $25.Climax has too much cash.The CEO,Trudy Ryder,wants to distribute the excess cash with an open market stock repurchase.She is contemplating buying back $10.9M worth of shares at a price of $25.Ricky Bobby owns 4 million shares of Climax.He purchased his shares before the repurchase for $25.If Ricky does not sell any shares during the repurchase,then what is his change in wealth from before to after the repurchase?

A) -$2.50 million
B) $0
C) $2.00 million
D) $2.50 million
E) $5.00 million

Question 40

The Baldwin Locomotive Works Inc.manufactures steam locomotives for North American railways.Selected financial information for Baldwin is provided in the table below.The CFO,Matthias Baldwin,wants to distribute $1B of cash by means of an extra dividend.What will the stock price be after the dividend?
Baldwin Locomotive Works Inc.
Selected Financial Information

A) $56.06
B) $62.73
C) $68.73
D) $69.39
E) $72.26

Question 41

Stark Industries currently trades for $50 per share and has 175M shares outstanding.It announces that it will execute a reverse-split on a 1-for-3 basis.How many shares will be outstanding after the split?

A) 52.50 M
B) 58.33 M
C) 116.67 M
D) 175.00 M
E) 233.33 M

Question 42

On January 1,Year 1 you bought 100 shares of Oscorp Inc.It is now January 1 of Year 2.You have recorded stock price information for Oscorp in the table,below.You want to calculate your return on the investment.After digging through your records you realize that Oscorp executed a 3-for-2 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 Cyberdyne shares.
Selected Financial Data
Oscorp Inc.

A) -33.33%
B) -16.67%
C) -8.33%
D) 0%
E) 8.33%

Question 43

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.

A) -30%
B) 100%
C) 103%
D) 110%
E) 200%

Question 44

Central Perk Coffee Co.trades for $0.85 per share and had 100M shares outstanding.It announces that it will execute a reverse-split on a 1-for-4 basis.What price will the stock trade for after the split?

A) $0.15
B) $0.85
C) $1.06
D) $2.40
E) $3.40

Question 45

Ewing Oil has $5B of excess cash and has announced an open market stock repurchase.Prior to the announcement,the stock was trading for $25 per share and there are 2.5B shares outstanding.Assume that the stock repurchase is executed at the pre-repurchase price.Sue Ellen has 100 shares of Ewing Oil.She bought the shares for $25 per share.Sue Ellen pays a tax rate of 20% on capital gains and 34% on dividends.What is Sue Ellen's after-tax wealth if she sells the same proportion of shares as Ewing repurchases,and that she receives the same price that Ewing pays? Assume that Sue Ellen sells her remaining shares after the repurchase at the price that prevails after the repurchase.

A) $1,800
B) $1,965
C) $2,250
D) $2,500
E) $2,625

Question 46

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 an open market repurchase.Assume that Acme is able to buy back 1,064,377,778 shares for an average price of $27 per share.What is Acme's stock price after the repurchase?
Selected Financial Information
For Acme Corporation

A) $27.33
B) $28.09
C) $28.31
D) $28.75
E) $28.33

Question 47

The Cash Store Co.just repurchased 11.875 million shares at a price of $14.The stock was trading at a price of $16 prior to the repurchase,but a market correction gave the company an opportunity to repurchase at a lower price.There were 100 million shares outstanding prior to the repurchase.The stock is now trading for $16.27.What is the aggregate gain in value to all the shares that remain outstanding as a result of the repurchase? (Compare their value before the repurchase to their value after.)

A) $18.125M
B) $20.125M
C) $21.122M
D) $23.794M
E) $27.000M

Question 48

Select financial data for Ewing Oil Inc.is provided in the table below.Ewing Oil repurchased $4.75B worth of shares during the year at an average price of $25.How many shares are outstanding at the end of the year?
Ewing Oil Inc.
Selected Financial Information

A) 1.67B
B) 1.86B
C) 1.97B
D) 2.05B
E) 2.19B

Question 49

Shares of Brockshire Holding Company Inc.trade for $90,000 per share.There are 1.75 million shares outstanding.If Brockshire wanted to execute a stock split so as to reduce the stock price to $80,what split ratio would they use?

A) 100-for-1
B) 125-for-1
C) 550-for-1
D) 1,125-for-1
E) 1,550-for-1

Question 50

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 10%,whereby each shareholder of record will receive one additional share for each 10 shares that they own.What will shares outstanding be after the dividend?
B&O Railroad Inc.
Selected Financial Information

A) 160.5M
B) 165.0M
C) 165.5M
D) 170.5M
E) 175.0M

Question 51

On January 1,Year 1 you bought 100 shares of Cyberdyne Systems Inc.It is now January 1 of Year 2.You have recorded stock price and dividend information for Cyberdyne in the table,below.You want to calculate your return on the investment.After digging through your records you realize that Cyberdyne executed a 2-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 Cyberdyne shares.
Selected Financial Data
Cyberdyne Systems Inc.

A) 30.00%
B) 33.33%
C) 36.67%
D) 37.75%
E) 40.00%

Question 52

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

A) $3.66
B) $4.05
C) $4.61
D) $5.71
E) $5.91

Question 53

Willys-Overland Motors Inc.produces 4×4 quarter-ton trucks.Selected financial information for Willys-Overland is provided in the table below.
The CEO,John Willys,wants to distribute $1B of cash using a stock repurchase.He intends to repurchase 15 million shares at a price of $70.Mr.Willys owns 22.5 million shares (worth $1,395 million before the repurchase).He does not plan to sell any of his shares during the repurchase.What is his wealth after the repurchase?
Willys-Overland Motors Inc.
Selected Financial Information

A) $1,375M
B) $1,280M
C) $1,385M
D) $1,390M
E) $1,395M

Question 54

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

A) $62.80
B) $63.00
C) $63.26
D) $70.66
E) $73.26

Question 55

Pearson Hardman Inc.currently has 2 million shares outstanding and earnings per share (EPS)of $6.After a 3-for-2 split,the shares outstanding and EPS will be:

A) 1.33 M Shares outstanding, $9 EPS
B) 1.50 M Shares outstanding, $6 EPS
C) 2.00 M Shares outstanding, $6 EPS
D) 3.00 M Shares outstanding, $4 EPS
E) 3.67 M Shares outstanding, $4 EPS

Question 56

Kaiser Shipyards Inc.is San Francisco-based ship builder which specializes in Liberty and Victory class cargo ships.The CEO,Henry Kaiser,wants to distribute $1B of cash using an open market stock repurchase.Assume that the company repurchases 11.650% of shares outstanding at a price of $62.725.What is the stock price after the repurchase?
Kaiser Shipyards Inc.
Selected Financial Information

A) $62.725
B) $63.650
C) $64.878
D) $78.725
E) $81.200

Question 57

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

A) 5.63%
B) 7.47%
C) 8.48%
D) 10.63%
E) 11.83%