The balance sheet for Pie Crust, Inc., is shown here in market value terms. Ther
ID: 2766336 • Letter: T
Question
The balance sheet for Pie Crust, Inc., is shown here in market value terms. There are 25,000 shares of stock outstanding.
The company has declared a dividend of $1.30 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 25,000 shares of stock outstanding.
Explanation / Answer
Answer 1
Share Price => 696750 / 25000 => $27.87
stock selling for today => $27.87
Answer 2
The share price will drop by the amount of the dividend, so:
27.87 - 1.30 => $26.57
Stock selling for tommorrow => $26.57
Answer 3
Dividend Amount => 1.30* 25000 => $32500
The Cash & Equity will decline by $32500
New Balance sheet
ASSETS AMOUNT ($) LIABILITIES AMOUNT ($) Cash 123500 Equity 664250 Fixed Assets 540750 TOTAL 664250 TOTAL 664250Related Questions
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