Question Details

How many new shares should be given per one old share 



 .	Brinkley Resources stock has has increased significantly over the last five years, selling now for $175 per share.  Management feels this price is too high for the average investor and wants to get the price down to a more typical level, which it thinks is $25 per share.  What stock split would be required to get to this price, assuming the transaction has no effect on the total market value?  Put another way, How many new shares should be given per one old share ?
								
	a.	6.65						
	b.	6.98						
	c.	7.00						
	d.	7.35						
	e.	7.72						
								

 .	Downie Foods recently completed a 4-for-1 stock split.  Prior to the split, its stock sold for $120 per share.  If the firm's total market value increased by 5% as a result of increased liquidity caused by the split, what was the stock price following the split?
								
	a.	$28.43						
	b.	$29.93						
	c.	$31.50						
	d.	$33.08						
	e.	$34.73						
								

 .	Warren Supply Inc. is evaluating its capital budget. The company finances with debt and common equity, but because of market conditions, wants to avoid issuing any new common stock during the coming year. It is forecasting an EPS of $3.00 for the coming year on its 500,000 outstanding shares of stock.  Its capital budget is forecasted at $800,000, and it is committed to maintaining a $2.00 dividend per share.  Given these constraints, what percentage of the capital budget must be financed with debt?
								
	a.	30.54%						
	b.	32.15%						
	c.	33.84%						
	d.	35.63%						
	e.	37.50%						
								

 .	The Meltzer Corporation is contemplating a 7-for-3 stock split.  The current stock price is $75.00 per share, and the firm believes that its total market value would increase by 5% as a result of the improved liquidity that it thinks would follow the split.  What is the stock's expected price following the split ?
								
	a.	$32.06						
	b.	$33.75						
	c.	$35.44						
	d.	$37.21						
	e.	$39.07						
								

 .	Getler Inc.- projected capital budget is $2,000,000, its target capital structure is 40% debt and 60% equity, and its forecasted net income is $1,000,000.  If the company follows a residual dividend policy, how much dividends will it pay or, alternatively, how much new stock must it issue?
								
		Dividends	Stock Issued					
	a.	$514,425	$162,901					
	b.	$541,500	$171,475					
	c.	$570,000	$180,500					
	d.	$600,000	$190,000					
	e.	$0	$200,000					




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