Question

The market value balance sheet for Bobaflex Manufacturing is shown here. The company has declared a 25 percent stock dividend. The stock goes ex dividend tomorrow (the chronology for a stock dividend is similar to that for a cash dividend)

  

Market Value Balance Sheet
Cash	$	85,000		Debt	$	144,000
Fixed assets		690,000		Equity		631,000
Total	$	775,000		Total	$	775,000

  

There are 20,000 shares of stock outstanding. What is the current share price? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

  

Current stock price

$

  

What will the ex-dividend price be? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Ex-dividend price

$

Answer 1

The Market Price of the Share- The Market Value of the Equity/No of shares outstanding The market value of the company-$ 631000 No. of shares outstanding 20000 -631000/20000 31.55 er dividend, new no of shares-20,000 x 1.25- 25000 Ex-dividend Price-631,000/ 25000= $25.24