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Kathy Snow wishes to purchase shares of Countdown Computing, Inc.

Kathy Snow wishes to purchase shares of Countdown Computing, Inc. The company's board of directors has declared a cash dividend of $1.19to be paid to holders of record on Wednesday,Sep. 21.

a. What day does this stock begin trading ex dividend?
b. What is the last day that Kathy can purchase the stock (trade date) and still receive the dividend?
c.What change, if any, would you expect in the price per share when the stock begins trading on the ex-dividend day?
d.If Kathy held the stock for less than one quarter and then sold it for $52.01per share, would she achieve a higher investment return by (1) buying the stock prior to the ex-dividend date at $ per share and collecting the $1.19dividend, or (2) buying it on the ex-dividend date at $46.82per share but not receiving the dividend?

The Howe Company's stockholders' equity account is as follows:

Common Stock (600,000 shares at $7 par)     $4,200,000
Paid-in capital in excess of par                           $3,000,000

Retained earnings                                                $1,600,000
     Total Stockholders equity                              $8,800,000

The earnings available for common stockholders from this period's operations are $100,000, which have been included as part of the $1.6 million retained earnings.

a. What is the maximum dividend per share that the firm can pay? (Assume that legal capital includes all paid-in capital.)

b.If the firm has $140,000 in cash, what is the largest per-share dividend it can pay without borrowing?

c. Indicate the accounts and changes, if any, that will result if the firm pays the dividends indicated in parts a and b.

d. Indicate the effects of an $80,000 cash dividend on stockholders' equity.

Bennett Farm Equipment Sales, Inc. is in a highly cyclical business. Although the firm has a target payout ratio of 25%, its board realizes that strict adherence to that ratio would result in a fluctuating dividend and create uncertainty for the firm's stockholders. Therefore, the firm has declared a regular dividend of $0.60 per share per year with extra cash dividends to be paid when earnings justify them. Earnings per share for the last several years are as follows:

Year EPS Year EPS  


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