The Mann Company currently has 232,000 outstanding shares selling at $134 each.
ID: 2717937 • Letter: T
Question
The Mann Company currently has 232,000 outstanding shares selling at $134 each. The firm is contemplating the declaration of a dividend of $4 at the end of the fiscal year that just began. Assume there are no taxes on dividends. Answer the following questions based on the Miller and Modigliani model, which is discussed in the text.
What will be the price of the stock on the ex-dividend date if the dividend is declared? (Do not round intermediate calculations.)
What will be the price of the stock at the end of the year if the dividend is not declared? (Do not round intermediate calculations.)
If Mann makes $5.7 million of new investments at the beginning of the period, earns net income of $3.1 million, and pays the dividend at the end of the year, how many shares of new stock must the firm issue to meet its funding needs? (Do not round intermediate calculations and round your answer to the nearest whole number (e.g., 32).)
The Mann Company currently has 232,000 outstanding shares selling at $134 each. The firm is contemplating the declaration of a dividend of $4 at the end of the fiscal year that just began. Assume there are no taxes on dividends. Answer the following questions based on the Miller and Modigliani model, which is discussed in the text. a. What will be the price of the stock on the ex-dividend date if the dividend is declared? (Do not round intermediate calculations.) Price of the stock $ b. What will be the price of the stock at the end of the year if the dividend is not declared? (Do not round intermediate calculations.) Price of the stock $ c. If Mann makes $5.7 million of new investments at the beginning of the period, earns net income of $3.1 million, and pays the dividend at the end of the year, how many shares of new stock must the firm issue to meet its funding needs? (Do not round intermediate calculations and round your answer to the nearest whole number (e.g., 32).) Number of shares
The Mann Company currently has 232,000 outstanding shares selling at $134 each. The firm is contemplating the declaration of a dividend of $4 at the end of the fiscal year that just began. Assume there are no taxes on dividends. Answer the following questions based on the Miller and Modigliani model, which is discussed in the text.
Explanation / Answer
Calculation of Ex- Dividend price of stock Price of stock=232000/134 1731.343 Calculation of Price of Stock if dividend is not declared Price of Stock=232000/130 1784.615
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