Stock Price Reactions to Dividend Announcements: the Dimples Golf Ball

question 34

Multiple Choice

Stock price reactions to dividend announcements: The Dimples Golf Ball Co. has paid a regular dividend of $0.20 quarterly for the last three years. The company has 2 million shares outstanding. Over the next year the company will have to spend $800,000 to service its debt and spend $200,000 in capital expenditures. The company has $500,000 of cash and cash equivalents. Over the next year how much cash must be provided from operations to continue to make the same quarterly dividend payment, and still have $500,000 in cash at the end of the year?

• A) 1,000,000
• B) 1,600,000
• C) 2,000,000
• D) 2,600,000

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