43. Portland Plastics Inc, has the following data.I it follows the residual divi

Question

43. Portland Plastics Inc, has the following data.I it follows the residual dividend mode, what is its forecasted dividend payout ratio? Capital budget % Debt Net income (NI) $12,000 40% $13,600 a. 51.29% b. 37.18% C. 48.47% d. 47.06% e. 45.18% 44. Mid-State BankCorp recently declared a 7-for-2 stock split. Prior to the split, the stock sold for $100 per share. If the firm's total market value is unchanged by the split, what will the stock price be following the split? a.$35.71 b.$28.57 c. $28.86 d.$26.29 e.$25.43 45. Select one answer that applies to you. a. I expect a good grade because I have studied hard and know almost everything in the exam. b. Finance is difficult because it is taught in English and is mathematics-oriented c. Professor Loh's class is difficult to follow; no idea what he talks about. d. Education is only an excuse for me to be on vacation. e. I am happy that this is the last question; I will come back next semester to repeat the course.

Explanation / Answer

43. Capital Budget 12000

Debt = 12000 *0.40 = 4800

Equity = 12000*0.60 = 7200

Net Income = 13600

Net income available for dividend = 13600-7200 = 6400

Dividend Payout Ratio = Dividend / Net Income = 6400/13600 = 47.06%

44. Current Price = 100

Stock Split 2 for 7

So MArket Price = 100*2/7 = 200/7 = 28.57

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