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Dividend Policies And Stock Financing Analysis

Master dividend policies and stock financing with this solved assignment.

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Dividend Policies and Stock Financing Analysis1.Residual dividend modelAxel Telecommunications has a target capital structure that consists of 70% debt and 30% equity. Thecompany anticipates that its capital budget 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 payout ratio?Round your answer to two decimal places.________%Answer:14.29%.2.Problem 15-2Stock splitGamma Medical's stock trades at $145 a share. The company is contemplating a 3-for-2 stock split.Assuming that the stock split will have no effect on the market value of its equity, what will be the company'sstock pricefollowing the stock split? Round your answer to the nearest cent.$________Answer:$96.67.3.Problem 15-3Stock repurchasesBeta Industries has net income of $3,800,000, and it has 870,000 shares of common stockoutstanding. Thecompany's stock currently trades at $70 a share. Beta is considering a plan in which it will use availablecash to repurchase 15% of its shares in the open market. The repurchase is expected to have no effect onnet income or the company's P/E ratio. What will be its stock price following the stock repurchase? Roundyour answer to two decimal places.$________Answer:$82.35.4.Problem 15-4Stock splitAfter a 5-for-1 stock split,Strasburg Company paid a dividend of $1.35 per new share, which represents a13% increase over last year's pre-split dividend. What was last year's dividend per share? Round youranswer to the nearest cent.$________Answer:$1.19

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