Problem 14-7 Regular Dividends [LO 1] The balance sheet for Price Cut, Inc., is
ID: 2698923 • Letter: P
Question
Problem 14-7 Regular Dividends [LO 1]
The balance sheet for Price Cut, Inc., is shown here in market value terms. There are 29,000 shares of stock outstanding.
The company has declared a dividend of $1.60 per share. The stock goes ex-dividend tomorrow. Ignore all tax effects.
What is the stock selling for today? (Do not include the dollar sign ($). Round your answer to 2 decimal places (e.g., 32.16).)
What will it sell for tomorrow? (Do not include the dollar sign ($). Round your answer to 2 decimal places (e.g., 32.16).)
The balance sheet for Price Cut, Inc., is shown here in market value terms. There are 29,000 shares of stock outstanding.
Explanation / Answer
Hi,
Please find the answer as follows:
Stock Price Today = 635970/29000 = 21.93
Ex Dividend Price = 21.93 - 1.60 = 20.33
Cash = 136000 - 29000*1.60 = 89600
Fixed Assets = 499970
Total = 89600 + 499970 = 589570
Equity = 635970 - 29000*1.60 = 589570
Thanks.