DelCash Inc., a discount retailer, has declared and paid a dividend of $ 500 million this year.

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

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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.

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