The balance sheet for Pie Crust, Inc., is shown here in market value terms. Ther
ID: 2762650 • Letter: T
Question
The balance sheet for Pie Crust, Inc., is shown here in market value terms. There are 26,000 shares of stock outstanding.
The company has declared a dividend of $1.00 per share. The stock goes ex-dividend tomorrow. Ignore all 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).)
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 Pie Crust, Inc., is shown here in market value terms. There are 26,000 shares of stock outstanding.
Explanation / Answer
Solution :
1
What is the stock selling for today?
25.80
Market value of equity/no of shares
670800/26000
2
What will it sell for tomorrow?
market value of equity-dividend/no of shares
24.80
(670800-26000)/26000
3..balance sheet look like after the dividends are paid
cash
130,000
equity
644,800
Fixed asset
514,800
(26000*24.8)
total
644,800
total
644,800
1
What is the stock selling for today?
25.80
Market value of equity/no of shares
670800/26000
2
What will it sell for tomorrow?
market value of equity-dividend/no of shares
24.80
(670800-26000)/26000
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