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Corporate Financial Strategies: Dividend Policies, Stock Splits, And Repurchases

Understand corporate finance strategies with this solved assignment.

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Corporate Financial Strategies: Dividend Policies, Stock Splits, and Repurchases1.Residual dividend modelAxel Telecommunications has a target capital structure that consists of 70% debt and 30% equity. Thecompany anticipates that its capitalbudget for the upcoming year will be $2,000,000. If Axel reports netincome of $700,000 and it follows a residual dividend payout policy, what will be its dividend payoutratio? Round your answer to two decimal places.___14.29_____%________________________________________2.Problem 15-2Stock splitGamma Medical's stock trades at $145 a share. The company is contemplating a 3-for-2 stock split.Assuming that the stock split will have no effect on the market value of its equity, what will be thecompany's stock price following the stock split? Round your answer to the nearest cent.$___96.67_____________________________________________3.Problem 15-3Stock repurchasesBeta Industries has net income of $3,800,000, and it has 870,000 shares of common stock outstanding.The company's stock currently trades at $70 a share. Beta is considering a plan in which it will useavailable cash to repurchase 15% of its shares in the open market. The repurchase is expected to haveno effect on net income or the company's P/E ratio. What will be its stock price following the stockrepurchase? Round your answer to two decimal places.$_____82.36___________________________________________

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