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

Cash = $ 45,400 Fixed assets= $ 480,000 Equity= $ 525,400

Shares Outstanding= 10,000

Dividend = $1.70 per share

Current Market Price = Market Value of equity / Shares Outstanding

Current Market Price =  $ 525,400 /10000

Current Market Price = $ 52.54

New Price per share = Stock Price- Dividend Price

New Price per share = $ 52.54 - $1.70

New Price per share = $ 50.84

Dividend Payment = Dividend per share x Number of Shares Outstanding

Dividend Payment = $1.70 x 10000

Dividend Payment = $17000

On the new balance sheet, the equity and cash accounts will decrease by $17000

Cash = 45,400- 17000

Cash = $ 28000

Equity = 525,400- 17000

Equity = $ 508400

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