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ans a-2:
New Balances are:
Retained Earnings
Capital Surplus
Common Stock(Given)
543120
647250
30250
1220620
ans b-2:
New Balances are:
Retained Earnings
Capital Surplus
Common Stock
268120
919500
33000
1220620
Problem 19-4
Existing No. of Shares=
Existing Share Price=
Existing Market Cap=
500000
70
35000000
75000
575000
35000000.00 Note: Stock Dividend has no impact on Market Ca
60.87
207500
707500
35000000.00 Note: Stock Dividend/Stock Split has no impact on
49.47
Note: If a corporation issues less than 25 percent
outstanding shares to shareholders, the transacti
ans c- The New Share Price is $49.47
for a greater proportion of the previously outstan
stock split.
Reverse Stock Split Ratio is 4 shares for every 7 shares, i.e., every 7 shares are converted into 4 share
New No. of Shares=
285714.29
New/Existing Market Cap=
35000000.00 Note: Reverse Stock Split has no impact on Marke
New Share Price=
122.50
ans d- The New Share Price is $122.50
ans eParts
a
b
c
d
New Shares
Outstanding
666667
575000
707500
285714
ssues less than 25 percent of the total amount of the number of previously
shareholders, the transaction is accounted for as a stock dividend. If the issuance is
n of the previously outstanding shares, the transaction is instead accounted for as a
Problem 19-5
Existing Market Cap=
No. of shares=
Existing Share Price=
Dividend Declared
Current/Cum Dividend Stock Price=
Ex-Dividend Stock Price=
505200
6000
84.20
1.5
84.20
82.70
36200
460000
496200
Equity
(82.7*6000) or Balancing Figure
496200
496200
Problem 19-6
Total Market Cap=
No. of Shares=
Price Per Share=
Share Repurchase Amount=
No. of Shares Repurchased=
404200
10000
40.42
19000
470.06 Assuming Shares repurchased at market price itself.
ans a- The no. of shares that will be outstanding after the repurchase=
ans b- The price after the repurchase shall be same as earlier, i.e., $40.42
Proof:
Market Cap now=404200-19000=
385200
No. of shares o/s=
9529.94
Share Price=
40.42
9529.94
FLYBUCKER CORPORATION
Value to be spent=
No.of shares=
Price per share=
Market Cap=
Current EPS=
Total Earnings=
Current P/E Ratio=
Shares Repurchased=
Revised no. of shares=
17000
2500
40
100000
1.6
4000
25
425
2075
ans aParticulars
Price Per Share
Shareholder Wealth
Alt1- Cash
Dividend
33.20
83000
Alt2-Share
Repurchase
40 Same logic as in P19-6
83000
Alt1- Cash
Dividend
1.60
20.75
Alt2-Share
Repurchase
1.93
20.75
ans bParticulars
EPS
PE ratio