Question Details

What is the best estimate of the stock's post-split price 



 .	Yesterday, Berryman Investments was selling for $90 per share. Today, the company completed a 7-for-2 stock split. If the total market value was unchanged by the split, what is the price of the stock today?
								
	a.	$23.21						
	b.	$24.43						
	c.	$25.71						
	d.	$27.00						
	e.	$28.35						
								

 .	Last week, Weschler Paint Corp. completed a 3-for-1 stock split.  Immediately prior to the split, its stock sold for $150 per share.  The firm's total market value was unchanged by the split.  Other things held constant, What is the best estimate of the stock's post-split price ?
								
	a.	$50.00						
	b.	$52.50						
	c.	$55.13						
	d.	$57.88						
	e.	$60.78						

 .	McCann Publishing has a target capital structure of 35% debt and 65% equity. This year- capital budget is $850,000 and it wants to pay a dividend of $400,000.  If the company follows a residual dividend policy, how much net income must it earn to meet its capital budgeting requirements and pay the dividend, all while keeping its capital structure in balance?
								
	a.	$904,875						
	b.	$952,500						
	c.	$1,000,125						
	d.	$1,050,131						
	e.	$1,102,638						
								

 .	Harvey- Industrial Plumbing Supply- target capital structure consists of 40% debt and 60% equity. Its capital budget this year is forecast to be $650,000.  It also wants to pay a dividend of $225,000.  If the company follows the residual dividend policy, how much net income must it earn to meet its capital requirements, pay the dividend, and keep the capital structure in balance?
								
	a.	$584,250						
	b.	$615,000						
	c.	$645,750						
	d.	$678,038						
	e.	$711,939						

 .	Victor Rumsfeld Inc.- dividend policy is under review by its board. Its projected capital budget is $2,000,000, its target capital structure is 60% debt and 40% equity, and its forecasted net income is $600,000.  If the company follows a residual dividend policy, what total dividends, if any, will it pay out?
								
	a.	$240,000						
	b.	$228,000						
	c.	$216,600						
	d.	$205,770						
	e.	$0						




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