FIN - Consider the following market value Balance Sheet
Question # 00032943
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Updated on: 11/22/2014 11:20 PM Due on: 11/23/2014
Consider the following market value Balance Sheet:
Cash
71,000
Other Assets
722,000
Total
793,000
Equity
793,000**
Total
793,000
**21,000 shares outstanding
The firm has declared a $2.10 per share cash dividend and the ex-dividend date is tomorrow.
1. What is the current (with dividend) price of the companys stock?
2. What should the value of a share be ex-dividend?
3. Prepare a market value Balance Sheet after the dividend is paid.
4. Suppose that instead of the cash dividend, the company announces a stock repurchase plan.
It will use $30,000 to repurchase outstanding shares. How many shares will be outstanding
after the repurchase?
5. What will the per share price be if the repurchase is successful?
Cash
71,000
Other Assets
722,000
Total
793,000
Equity
793,000**
Total
793,000
**21,000 shares outstanding
The firm has declared a $2.10 per share cash dividend and the ex-dividend date is tomorrow.
1. What is the current (with dividend) price of the companys stock?
2. What should the value of a share be ex-dividend?
3. Prepare a market value Balance Sheet after the dividend is paid.
4. Suppose that instead of the cash dividend, the company announces a stock repurchase plan.
It will use $30,000 to repurchase outstanding shares. How many shares will be outstanding
after the repurchase?
5. What will the per share price be if the repurchase is successful?
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Solution: FIN - Consider the following market value Balance Sheet