The market value balance sheet for Tidwell Manufacturing is shown here. Tidwell
ID: 2652739 • Letter: T
Question
The market value balance sheet for Tidwell Manufacturing is shown here. Tidwell has declared a 25 percent stock dividend. The stock goes ex-dividend tomorrow (the chronology for a stock dividend is similar to that for a cash dividend). There are 27,000 shares of stock outstanding.
What will the ex-dividend price be? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
The market value balance sheet for Tidwell Manufacturing is shown here. Tidwell has declared a 25 percent stock dividend. The stock goes ex-dividend tomorrow (the chronology for a stock dividend is similar to that for a cash dividend). There are 27,000 shares of stock outstanding.
Explanation / Answer
No of stock dividend issued = 27000*25% = 6750
Total no of stock outstanding after stock dividend = 27000 + 6750 = 33750
Equity Value = 758700
Ex-dividend price = Equity Value/Total no of stock outstanding after stock dividend
Ex-dividend price = 758700/33750
Ex-dividend price = $ 22.48
Answer
Ex-dividend price = $ 22.48
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