Suppose Arbuckle made a surprise announcement that it would do a share repurchase rather than pay a special dividend. b. What net tax savings per share for an investor would result from this decision? c. What would happen to Arbuckle’s stock price upon the announcement of this change? Problem 17-19 on Dividend Capture Strategy based on Chapter 17 Payout Policy Que Corporation pays a regular dividend of $1 per share.
codification oCh 15 FASB Codification Case Treasury Stock Facts Target Inc. arranged to purchase a large block of its common stock from a major shareholder. The total number of shares purchased is 10,000 and these shares are to be held as treasury shares. Target Inc. uses the cost method to account for treasury shares. This shareholder had a controlling interest before the transaction. After the transaction this shareholder no longer has a controlling interest.
The parent receives annual dividends from the subsidiary of $2,500,000. If the parent's marginal tax rate is 34% and if the exclusion on intercompany dividends is 70%, what is the effective tax rate on the intercompany dividends, and how much net dividends are received? Question 20 New York Waste (NYW) is considering refunding a $50,000,000, annual payment, 14% coupon, 30-year bond issue that was issued 5 years ago. It has been amortizing $3 million of flotation costs on these bonds over their 30-year life. The company could sell a new issue of 25-year bonds at an annual interest rate of 11.67% in today's market.
(TCO A) On March 1, 2010, Ruiz Corporation issued $800,000 of 8% nonconvertible bonds at 104, which are due on February 28, 2030. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase for $50 one share of Ruiz common stock, par value $25. The bonds without the warrants would normally sell at 95. On March 1, 2010, the fair market value of Ruiz's common stock was $40 per share and the fair market value of the warrants was $2.00. What amount should Ruiz record on March 1, 2010 as paid-in capital from stock warrants?
In year 2 it reports a $40,000 loss. For year 3, it reports taxable income from operations of $100,000 before any loss carryovers. Using the corporate tax rate table, determine how much tax Willow Corp. will pay for year 3. Answer: $4,500. Description (1) Year 3 taxable income $100,000 (2) Year 1 NOL carryforward ($30,000) (3) Year 2 NOL carryforward ($40,000) (4) Taxable income reported 30,000 (1) - (2) -
Facts In 1983, GEICO announced plans to purchase several million shares of its outstanding common stock for $60 per share. Among GEICO’s largest stockholders was Berkshire Hathaway, Inc., an investment company. Executives of the two companies decided that Berkshire would tender approximately 350,000 if its GEICO shares in the stock buyback plan, which would allow Berkshire to treat the transaction as a proportionate redemption. In a proportionate redemption, the percentage equity interest of on company in a second company is maintained at the level that existed immediately before the transaction. For federal taxation purposes, the proceeds received by the investor company in a proportionate redemption are taxed as dividends by applying the effective intercorporate dividend tax rate.
b. May 1, 2010, the company paid $40,000 cash to purchase two trucks. The trucks’ useful life is 10 years. Medford uses
In 2014, Hollis Corporation reported net income of $1,077,000. It declared and paid preferred stock dividends of $269,000. During 2014, Hollis had a weighted average of 199,100 common shares outstanding. Compute Hollis’s 2014 earnings per share. Brief Exercise 4-10 Your answer is correct.
| | | | | * Question 4 2 out of 2 points | | | Using the data below, determine the amount of consumer surplus, if any, in the market. The market clearing price for matinee tickets is $3 | Matinee TicketsWilling to Pay(WTP) | Tony | $1 | George | $2 | Deshon | $3 | Mario | $4 | Antonio | $5 | Brittney | $6 | | | | | | Selected Answer: | $6 | | | | | * Question 5 2 out of 2 points | | | Examine the graph below. The government has placed a $200 tariff on product z. The new equilibrium price is $600. What has happened to consumer surplus?
| | 8.78% | | 10.73% | | 11.71% | | 9.76% | | 4.88% | Redesigned Computers has 10 percent coupon bonds outstanding with a current market price of $910.00. The yield to maturity is 11.34 percent and the face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures? | 12 years | | 13 years | | 15 years | | 21 years | | 14 years