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What is the company current share price

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Question - The balance sheet for Levy Corp. is shown below. All figures are based on market values (including equity). There are 100 mm shares outstanding. Ignore taxes.

Market Value Balance Sheet (in $mm)

Assets:

Liabilities and Shareholders' Equity:

Cash 200

Debt 100

Fixed assets 300

Equity 400

Total 500

Total 500

(i) What is the company's current share price?

(ii) If the company declares a cash dividend of $1 per share, (a) what will be the company's stock price and number of shares outstanding after the dividends are paid? (b) What are the cash balance and equity market value after the dividends are paid? (c) What are the company's debt-to-equity ratios before and after the dividend payout? (d) How would the company's leverage change (increase, decrease, no change) after the dividend payout?

(iii) If the company decides to repurchase $100 mm worth of stock instead of paying a cash dividend of $1 per share, (a) what will be the company's stock price and number of shares outstanding after the share repurchase? (b) What are the cash balance and equity market value after the share repurchase? (c) What is the company's debt-to-equity ratio after the share repurchase? (d) How would the company's leverage change after the share repurchase?

(iv) If the company declares a 2-for-1 stock split, (a) what will be the company's stock price and number of shares outstanding after the stock split? (b) What are the cash balance and equity market value after the stock split? (c) What is the company's debt-to-equity ratio after the stock split? (d) How would the company's leverage change after the stock split?

Reference no: EM132957865

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