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.

The company has declared a dividend of $1.60 per share. The stock goes ex dividend tomorrow.

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.)

Ignoring any tax effects, what will the balance sheet look like after the dividends are paid? (Do not round intermediate calculations.)

The balance sheet for Ferguson Corp. is shown here in market value terms. There are 10,000 shares of stock outstanding.

Explanation / Answer

1)Stock price for today:
No of shares =10000
Dividend declared=1.6 per share
Dividend amount = 1.6*10000=1,60,000$
Existing equity = 5,15,300
Dividend =160000
Total equity =6,75,300
Price per share =6,75,300/10000
= $67.53 per share
Value of price for tommorrow:
Present equity = 5,15,300
No of shares = 10000 shafres
Value per share Ex dividend basis = 515300/10000
=$51.53 per share

Balance sheet
Cash $45,300 Equity $515300
+Dividend $160000
$6,75,300
-P &L loss $1,60,000
$ 5,15,300

Fixed assets $470000

Total $5,15,300 Total $5,15,300

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