Investment project

1) The owners’ equity accounts for Overby International are shown here:Common stock ($1 par value)$45,000Capital surplus215,000Retained earnings710,000Total owners’ equity$970,000a. Assume the company’s stock currently sells for $24 per share and a stock dividend of 5 percent is declared.

How many new shares will be distributed? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)New shares issued Show the new balance for each equity account. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32

Delta Corporation is considering an investment project that costs $5,000 today. It expects the project will yield income of $2,000 at the end of each year for years 1, 2, and 3. After year 3 the project will end.

the interest rate is 10%, the firm

A)should forgo the investment.

B)is just indifferent between undertaking the investment and not.

C)indeterminate from the given information

D)should undertake the investment.

Solution:

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