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Jinnah University for Women

Department of Business Administration
BBA 3 A and B
Class Activity
Distributions to Share Holders and Share Repurchase

1. The Landfill Company declared a dividend of $.80 a share on October 15 to holders of record on
Monday, November 1. The dividend is payable on December 15. George purchased 200 shares of
Landfill Company stock on Friday, October 29. How much dividend income will George receive
on December 15 from the Landfill Company?

2. On July 14, you purchased 1,500 shares of Myron stock. On August 1, you sold 500 shares of
this stock for $16 a share. You sold an additional 300 shares on August 18at a price of $18 a
share. The company declared a $.75 per share dividend on August 3 to holders of record as of
Wednesday, August 15. This dividend is payable on August 31. How much dividend income will
you receive on August 31 as a result of your ownership of Myron stock?

3. Jaguar, Inc. maintains a debt-equity ratio of .60 and follows a residual dividend policy. The
company has after tax earnings of $3,100 for the year and needs $3,000 for new investments.
What is the total amount Jaguar will pay out in dividends for this year?

4. Benton Enterprises has planned investments of $2,250 for next year and an after tax net income
of $1,400 this year. The company has a residual dividend policy and maintains a debt-equity ratio
of .80. How much new equity is required to fund the investments for next year?

5. A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,360
and other assets of $6,640. Equity is worth $8,000. The firm has 500 shares of stock outstanding
and net income of $600. The firm has decided to spend all of its excess cash on a share
repurchase program. How many shares of stock will be outstanding after the stock repurchase is
completed?

6. A firm has a market value equal to its book value. Currently, the firm has excess cash of $990
and other assets of $10,010. Equity is worth $11,000. The firm has 500 shares of stock
outstanding and net income of $2,250. The firm is going to use all of its excess cash to
repurchase shares of stock. What will the stock price per share be after the stock repurchase is
completed?

7. Jenkin's has 11,000 shares of stock outstanding with a par value of $1.00 per share and a market
value of $21 per share. The firm just announced a 100 percent (large) stock dividend. What is the
market value per share after the dividend?

8. Mario's has 18,000 shares of stock outstanding with a par value of $1.00 per share and a market
price of $33 a share. The firm just announced a 5-for-3 stock split. What will the par value of the
stock be after the split?
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9. Neptune, Inc. has 175,000 shares of stock outstanding at a market price of $59 a share. The
company has just announced a 3-for-2 stock split. How many shares of stock will be outstanding
after the split?

10. Smith Cleaning Services has 20,000 shares of stock outstanding at a market price of $8 a share.
What will the market price per share be if the company does a 1-for-3 reverse stock split?