Use the following data for Tremont Corp. to determine intrinsic value per share

Question

Use the following data for Tremont Corp. to determine intrinsic value per share of stock after making a dividend payment. Value of operations $75,000 Short-term investments $5,000 Debt $30,000 Number of shares 500 The company distributes $5,000 as dividend payments. What will the intrinsic per share stock price be immediately after the distribution? $60 $210 $150 $90 None of the above Use the following data for Tremont Corp. to determine intrinsic value per share of stock after making a dividend payment. Value of operations $75,000 Short-term investments $5,000 Debt $30,000 Number of shares 500 The company distributes $5,000 as dividend payments. What will the intrinsic per share stock price be immediately after the distribution?

Explanation / Answer

Enterprise Value = Market Capitalization + Current Portion of Long Term Debt + Non-Current Portion of Long Term Debt + Book Value of Preferred Stock + Book Value of Minority Interest - Cash and Short Term Investments

75000=30000-5000+Market Cap

So, Market Cap=50000

Share price before dividends=50000/500=100

Dividends=5000/500=10

So, share price after dividends=100-10=90

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