19-2: EXCEL: Stock Dividends: The owners' equity accounts for Hexagon International are shown here;Common stock ($1 par value) $20,000;Capital surplus 210,000;Retained earnings 735,300;Total owners' equity $965,300;a. If Hexagon stock currently sells for $48 per share and a 10 percent stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change.;b. If Hexagon declared a 25 percent stock dividend, how would the accounts change?;19-4: EXCEL: Stock Splits and Stock Dividends. Roll Corporation (RC) currently has 260,000 shares of stock outstanding that sell for $78 per share. Assuming no market imperfections or tax effects exist, what will the share price be after;a. RC has a five-for-three stock split?;b. RC has a 15 percent stock dividend?;c. RC has a 42.5 percent stock dividend?;d. RC has a four-for-seven reverse stock split?;20-5: The St. Anger Corporation needs to raise $35 million to finance its expansion into new markets. The company will see new shares of equity via a general cash offering to raise the needed funds. If the offer price is $31 per share and the company's underwriters charge an 8 percent spread, how many shares need to be sold?;20-6: EXCEL: Calculating Flotation Costs: In the previous problem if the SEC filing fee and associated administrative expenses of the offering are $900,000, how many shares need to be sold?;21-7: EXCEL: Super Sonics Entertainment is considering buying a machine that costs $435,000. The machine will be depreciated over five years by the straight-line method and will be worthless at that time. The company can lease the machine with year-end payments of $107,500. The company can issue bonds at a 9 percent interest rate. If the corporate tax rate is 35 percent, should the company buy or lease?;Attachments;Stock Dividends.docx
Equity Accounts and Stock Dividends
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