Smathers Jellies follows a residual dividend policy and maintains a constant debt-equity ratio. There are 20,000...

Transcribed Image Text:

Smathers Jellies follows a residual dividend policy and maintains a constant debt-equity ratio. There are 20,000 shares of stock outstanding at a market price of $10 a share. There are 300 bonds outstanding, which are selling at par value ($1,000 each). The projected spending on capital projects is $120,000 for next year. Earnings for next year are estimated at $120,000. What is the projected dividend amount per share? (Do not use the $ sign. If your answer is $1,234.56, then enter 1234.56) Smathers Jellies follows a residual dividend policy and maintains a constant debt-equity ratio. There are 20,000 shares of stock outstanding at a market price of $10 a share. There are 300 bonds outstanding, which are selling at par value ($1,000 each). The projected spending on capital projects is $120,000 for next year. Earnings for next year are estimated at $120,000. What is the projected dividend amount per share? (Do not use the $ sign. If your answer is $1,234.56, then enter 1234.56)

Answer rating: 100% (QA)

Step 1 Calculate the total equity value Total equity value Number of shares outstanding Market price ... View the full answer