1.Ashkenazi Companies has the following stockholders’ equity account:


Assuming that state laws define legal capital solely as the par value of common stock, how much of a per-share dividend can Ashkenazi pay? If legal capital were more broadly defined to include all paid-in capital, how much of a per-share dividend could Ashkenazi pay?

2. The board of Kopi Industries is considering a new dividend policy that would set dividends at 60% of earnings. The recent past has witnessed earnings per share (EPS) and dividends paid per share as shown in the following table.

Based on Kopi’s historical dividend payout ratio, discuss whether a constant payout

ratio of 60% would benefit shareholders.