Question

Southern Foods recently liquidated its fast food division. That unit represented 20 percent of the firm's...

Southern Foods recently liquidated its fast food division. That unit represented 20 percent of the firm's overall market value. Prior to the liquidation, the firm's stock was selling for $43 a share, the annual dividend was steady at $1.20 per share, and there were 16,000 shares outstanding. The firm is preparing to distribute the entire liquidation proceeds to shareholders. How much will the liquidating dividend be per share?

  

$6.10

  

$8.60

  

$7.40

  

$0.24

  

$0.36

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Answer #1

B. $8.60

Liquidating dividend per share = $43 × 0.20 = $8.60

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