The balance sheet for Ferguson Corp. is shown here in market value terms. There

Question

The balance sheet for Ferguson Corp. is shown here in market value terms. There are 10,000 shares of stock outstanding.

  

  

Ignoring any tax effects, what is the stock selling for today? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

  

  

Ignoring any tax effects, what will it sell for tomorrow? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

  

  

The balance sheet for Ferguson Corp. is shown here in market value terms. There are 10,000 shares of stock outstanding.

Explanation / Answer

Ignoring tax effects, the stock selling for today is :-

P0= Equity/ No. of shares

= $525400/ $10000 shares

= $52.54 per share

Therefore the stock price is $52.54 per share

Ignoring tax effects, the stock will sell for tomorrow is :-

P1 = Today stock price Less Dividend per share

   = $52.54 - $1.70

   = $50.84

The balance sheet look like after the dividends are paid

The total dividend paid will be = $1.70 * 10000shares = $17000

The Cash and Equity account both will be declined by $17000.               

              Balance Sheet   Cash          $    28400                                                    Equity $ 508400   Fixed assets    480000      Total $    508400       Total $ 508400

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