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 5,000 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 5,000 shares of stock outstanding.

Explanation / Answer

Answer to Part 1 : Stock selling price for today:

Stock Selling price for today = Total marke value of Equity/ No of Outstanding Share

Stock Selling price for today = 363800/5000

Stock Selling price for today = 72.76

Answer to Part 2: Selling price for tomorrow

Selling price for tomorrow = Seling price for today - Dividend paid

Selling price for tomorrow = 72.76- 1.50

Selling price for tomorrow = 71.26

Answer to Part 3:

In the Balance Sheet, the equity and cash will reduce by the amount of dividend paid

Dividend paid = 5000 share * 1.50

Dividend paid = 7500

The Balance Sheet after dividends are paid :

Assets Amount liabilities Amount Fixed Assets 320000 Equity 356300 Cash 36300 Total 356300 Total 356300

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