Questions from Corporate Finance


Q: FCF Co. has 20,000 shares outstanding and a total

FCF Co. has 20,000 shares outstanding and a total market value of $1 million, $300 thousand of which is debt and the other $700 thousand is equity. It is planning a 10% stock dividend. a. What is the...

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Q: Suppose the stock of Host Hotels & Resorts is currently trading for

Suppose the stock of Host Hotels & Resorts is currently trading for $20 per share. a. If Host issues a 20% stock dividend, what would its new share price be? b. If Host does a 3:2 stock split, what wo...

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Q: If Berkshire Hathaway’s A shares are trading at $120,000

If Berkshire Hathaway’s A shares are trading at $120,000, what split ratio would it need to bring its stock price down to $50?

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Q: After the market close on May 11, 2001, Adaptec,

After the market close on May 11, 2001, Adaptec, Inc., distributed a dividend of shares of the stock of its software division, Roxio, Inc. Each Adaptec shareholder received 0.1646 share of Roxio stock...

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Q: ABC Corporation announced that it would pay a dividend to all shareholders

ABC Corporation announced that it would pay a dividend to all shareholders of record as of Monday, April 5, 2010. It takes three business days after a purchase for the new owners of a share of stock t...

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Q: RFC Corp. has announced a $1 dividend. If RFC’s

RFC Corp. has announced a $1 dividend. If RFC’s last price while trading cum dividend is $50, what should its first ex-dividend price be (assuming perfect capital markets)?

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Q: ECB Co. has 1 million shares outstanding selling at $20

ECB Co. has 1 million shares outstanding selling at $20 per share. It plans to repurchase 100,000 shares at the market price. What will its market capitalization be after the repurchase? What will its...

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Q: KMS corporation has assets of $500 million, $50 million

KMS corporation has assets of $500 million, $50 million of which are cash. It has debt of $200 million. If KMS repurchases $20 million of its stock: a. What changes will occur on its balance sheet? b...

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Q: Suppose that KMS in Problem 4 decides to initiate a dividend instead

Suppose that KMS in Problem 4 decides to initiate a dividend instead, but it wants the present value of the payout to be the same $20 million. If its cost of equity capital is 10%, to what amount per...

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Q: EJH Company has a market capitalization of $1 billion and 20

EJH Company has a market capitalization of $1 billion and 20 million shares outstanding. It plans to distribute $100 million through an open market repurchase. Assuming perfect capital markets: a. Wha...

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