Problem 1 Jaguar, Inc. maintains a debt-equity ratio of .60 and follows a residu
ID: 2633140 • Letter: P
Question
Problem 1
Jaguar, Inc. maintains a debt-equity ratio of .60 and follows a residual dividend policy. The company has after-tax earnings of $3,100 for the year and needs $3,000 for new investments. What is the total amount Jaguar will pay out in dividends for this year? Show your work.
Problem 2
The common stock of Vicary, Inc. is selling for $78 a share. Currently, the firm has a total market value of $6,825,000.
a)How many shares of stock will be outstanding if the firm does a 3-for-2 stock split?
b) What will the share price be after the stock split.
Explanation / Answer
1)
(1.00 / 1.60) $1,875 = $1,225
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