DelCash Inc., a discount retailer, has declared and paid a dividend of $ 500 million this year. You notice, looking over
their financial statements, that they have net income of $ 2 billion for this year, and that the cash balance for the firm
increased by $ 250 million.
(a) If the non-cash working capital was unchanged over the year, and the firm finances 30% of its net capital expenditures
from debt, estimate the net capital expenditures that DelCash had during the year.
(b) At the start of the ex-dividend day, DelCash’s stock was trading at $25. By the end of the day, the stock was trading
at $23.20. If the typical stockholder in DelCash paid 40% on dividend income and 20% on capital gains taxes which can
be deferred for 5 years at an opportunity cost of 8%, estimate the number of shares outstanding in the firm.