December 31, 2010 Contributed capital: Common shares, unlimited shares authorized, 20,000 shares issued and outstanding 216,000 Retained earnings 70,000 Total shareholders’ equity 286,000 On Jan 15, 2011, the Board of Director’s declared a 20% share dividend, to be distributed on Jan. 30, 2011, to shareholders of record on Jan 20, 2011. The market value of the shares was $12 per share on Jan. 15th and $12.50 per share on Jan. 30th. a) Prepare the journal entry
Words: 471 - Pages: 2
3. Consider the following share repurchase proposal: Blaine will use $209 million of cash from its balance sheet and $50 million in new debt bearing an interest rate of 6.75% to repurchase 14 million shares at a price of $18.5 per share. How would such a buyback affect Blaine? Consider the impact on, among other things, the family’s ownership interest, and the company’s cost of capital. After repurchasing the amount of the common stock outstanding will decrease from 59.052 million to 45.052 million
Words: 465 - Pages: 2
Summary The objective of this paper is to examine the relationship between corporate governance on dividends payout in Canada to better understand "why companies pay dividends". In the light of agency theory, Adjaoud and Ben-Amar tested two competing hypothesis, which are outcome and substitution hypothesis. They chose Canada to examine the relationship between corporate governance and corporate dividend payments for two reasons; first, the comparability between Canada and USA from the perspective
Words: 1220 - Pages: 5
Wrigley’s WACC before recapitalization is 10.9%. Since the WACC is same as cost of equity. After raising $3 billion debt for pay dividend or share repurchase, it would change the Wrigley’s capital structure. The recapitalized WACC is 10.91%, which does not change. In general, the WACC would decrease after raise up large debt and the firm value would increase. In Wrigley’s case, the re-leveraged beta increased from 0.78 to 0.85 and debt ratios increased from 0 to 20.9%, which make the firm value stay
Words: 257 - Pages: 2
around 1800 stores worldwide and has established itself as a successful retailer over the past decades. However, the question for Aunt Mary is not how wealthy the corporation has been, but whether it is the right time to purchase Lowe’s company's share now. The answer is yes. Here are the top five reasons why Lowe’s stock is a buy. Reason 1: A Gradual Recovery in the Housing Market Homebuilding in the U.S. shot up 11.3% in December of 2016, which directly caused comparable sales at home improvement
Words: 912 - Pages: 4
shareholder equity through share repurchases and share cancellations. The reduction of capital method is used if the firm wishes to increase the shareholders’ values and to produce a more efficient capital structure. Hill country can repurchase their shares from the marketplace. A share repurchase not only reduces the number of shares outstanding, it also increases the earnings per share and elevates the market value of the remaining shares in the market. After repurchasing, these shares either will be cancelled
Words: 968 - Pages: 4
assets minus its total liabilities or as share capital plus retained earnings minus treasury shares. FOCAL POINT: The problem is focused by such perspectives as follows. a.The point which is being focused in this project is that the deep study of stock holder equity that consists brief of its all contents and terms related to it. b.To understand the effects on stock holder equity when company issue shares, pay dividends, acquiring of assets against shares, treasury stock, retain earnings, and costs
Words: 2108 - Pages: 9
1.In theory, to fund an increased dividend payout or a stock buyback, a firm might invest less, borrow more, or issue more stock. Which of those three elements is Gainesboro's management willing to vary, and which elements remain fixed as a matter of the company's policy? Gainesboro wants to increase value to shareholders but also keep paying dividends. However, the company's main concern is the debt to equity ratio. The cap Gaineboro set is at 40% and anything over this percentage is “unthinkable
Words: 1110 - Pages: 5
Teaching Note Synopsis and Objectives Other cases in which dividend policy is an important issue: “Deutsche Brauerei,” (Case 11) In mid September 2005, Ashley Swenson, the chief financial officer (CFO) of a large computer-aided design and computer-aided manufacturing (CAD/CAM) equipment manufacturer needed to decide whether to pay out dividends to the firm’s shareholders, or to repurchase stock. If Swenson chose to pay out dividends, she would have to also decide upon the magnitude of the payout
Words: 5756 - Pages: 24
“IMPACT OF DIVIDEND ON STOCK PRICES” ABSTRACT The project aims to establish the impact of dividend on market price of a share. This has been done for individual companies in Steel sector. After studying the basic concepts of dividends and dividend policy I am able to get a proper perspective of the requirements of the project and also gain a better understanding of the results obtained. I have looked to find the relation between pre dividend price change and the dividend using
Words: 8285 - Pages: 34
