Summary 2 Active Investor Strategy 2 Effects of $3 Billion in New Debt for Dividend or Stock Repurchase 2 a. Outstanding Shares 2 b. Book Value of Equity 2 c. Price per Share 2 d. Earnings per Share 3 e. Debt Interest Coverage Rations and Financial Flexibility 3 f. Outstanding Shares 3 Wrigley’s Current Weighted Average Cost of Capital (WACC) 4 Debt Proceeds to Pay a Dividend or Repurchase Shares 4 Wrigley’s Recapitalization 5 Appendices 5 i. Objectives This
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Calculate Preferred Dividends Preferred stock (or preference shares) is a special class of stock that pays a fixed dividend set at the time of issuance. Also‚ preferred dividends must be paid before common stock dividends. To calculate the dividends for preferred stocks‚ you need to multiply the par value of the shares by the dividend percentage. Example 1: If the dividend percentage is 8 percent and the preferred stock was issued at $20 per share‚ then the annual dividend is: 8% * $20 = $1.60 per share
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Preferred Stock Benita Becton XACC/291 08/23/13 Lisa Pendleton Preferred Stock Preferred stock is capital stock that has some contractual preferences over common stock. These particular stocks give stockholders a priority in distributions of earnings and assets in the event of liquidation. Dividend preferences are one of those features that make preferred stock attractive to investors. If the dividend rate on preferred stock is 5.00 per share‚ then common stockholders don’t receive their
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With Preferred stock‚ there are of a variety of features that can be added to in order to either increase its attractiveness to investors‚ or to make it easier for the issuing company to buy back. Some company uses this to gain access to cash fast and they can control their payback. Preferred stock can have a lot of features add to it but here are the four major categories they will fall into: Callable this feature gives a company the ability to buy back preferred stock on specific dates and at
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Stock dividend * Definition: * A corporate distribution to shareholders declared out of profits‚ at the discretion of the directors of the corporation‚ which is paid in the form of shares of stock‚ as opposed to money‚ and increases the number of shares. * A dividend paid as additional shares of stock rather than as cash. If dividends paid are in the form of cash‚ those dividends are taxable. When a company issues a stock dividend‚ rather than cash‚ there usually are not tax consequences
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payment Cash dividends (most common) are those paid out in currency‚ usually via electronic funds transfer or a printed paper check. Such dividends are a form of investment income and are usually taxable to the recipient in the year they are paid. This is the most common method of sharing corporate profits with the shareholders of the company. For each share owned‚ a declared amount of money is distributed. Thus‚ if a person owns 100 shares and the cash dividend is USD $0.50 per share‚ the holder
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Preferred Stock is referred to as preferred‚ because there is a higher claim against the stock than common stocks. There is a difference from preferred stocks and common stock when it comes to their dividends and liquidation. A preferred stockholder would receive their dividends sooner than common stockholders. This makes it so that if a preferred stockholder were to decide to opt out of paying their dividends than the common stock will not have a dividend. “The best way to think of preferred stock
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Pancino Corporation owns a 90% interest in Sakal Corporation’s common stock. Throughout 2010‚ Sakal had 20‚000 shares of common stock outstanding and Pancino had 50‚000 shares of common stock outstanding. Sakal’s only dilutive security consists of 2‚500 stock options‚ with an exercise price of $20 per share. The average price of Sakal’s stock is $50 per share in 2010. The options are exercisable for one share of Sakal’s common stock. Pancino’s and Sakal’s separate net incomes for the year are $100
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29) All of the following features may be characteristic of preferred stock EXCEPT A) callable. B) no maturity date. C) tax-deductible dividends. D) convertible. Answer: c If a firm has class A and class B common stock outstanding‚ it means that A) each class receives a different dividend. B) the par value of each class is different. C) the dividend paid to one of the classes is tax deductible by the corporation
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The expected yield on junk bonds is lower than the yield on AAA-rated bonds because of the higher default risk associated with junk bonds. Answer True False 1 points Question 4 In general‚ interest on bonds‚ like dividends on preferred stock‚ may be deferred until a later date at the discretion of management‚ making debt financing more appealing to corporate managers. Answer True False 1 points Question 5 Restrictive provisions in bond indenture agreements
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