Chapter 10
3. a) The new price for the stock shall be $45. b) Before the stock split, the payout was $6 per share and after the split, the dividend is $3 per share.
4. a) After the cash dividend is paid, the balance sheet will show cash of $26 Million and Retained earnings of $60 Million. b) A 5% dividend will cause cash to change to $21 Million ($2.5 per share x 2 million outstanding shares that will receive the dividends) and retained earnings will drop to $57 Million. c) A 2 for 1 reverse split will show that the number of outstanding shares will decrease to 1,000,000, but the other values remain undisturbed except that the par value will increase to $100.
5) The effect of the stock dividend is Common stock increases by $20,000, outstanding shares increase by 20,000 and Additional Paid in Capital increases by $60,000, while retained earnings decreases by $80,000. The effect of the cash dividend is that cash decreases by $30,000 and retained earnings will drop by an equal amount.
7. a. EPS drops to $2.10, b) no change, c) no change, d) no change, e) doubles to 2,000,000, f) no change.

Chapter 11
1. a) V= 2 (1.06)/4%= $25 is the value of the stock.
b) The value of the stock changes to $79.5
c) The value of the stock increases to $141.33
d) The value of the stock changes to 34.66
e) The value of the stock changes to $39.87
2) I'd be willing to pay $77.
3) a) The maximum prices based on the dividend growth model would be $15.29, 25.5 and 49.6 respectively.
b) The implied percentage return would be 4.65% if the investor buys stock A
c) If the P/E ratio was 12, the prices would be $24, 38.4 and 84. If the P/E was 7, they'd change to 14, 22.4 and 49.
d) The negative growth rate for stock C implies that future dividend will be lesser than current dividend.

Chapter 14:
Answer 1: If required rate of return is 13%, then the value is $69.23. If the