The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be $0.80 per share, and there are 22,000 shares of stock outstanding. The market-value balance sheet for Payout is shown below. Ignore taxes.
Assets Liabilities and Equity
Cash $200,000 Equity $1,210,000
Fixed assets $1,010,000
a. What price is Payout stock selling for today? (Round your answer to 2 decimal places.)
b. What price will it sell for tomorrow? (Round your answer to 2 decimal places.)
a
Price = MV of equity/shares = 1210000/22000 = 55
b
price tomorrow = price today-dividend = 55-0.8 = 54.2
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