Question

The balance sheet for Tempest, Inc., is shown here in market value terms. There are 19,000 shares of stock outstanding Market Value Balance Sheet $120,000 $476,600 Cash $596,600 Fixed assets Equity Total $596,600 $596,600 Total The company has declared a dividend of $1.15 per share. The stock goes ex dividend tomorrow. Ignore any tax effects. a. What is the stock selling for today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will it sell for tomorrow? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Stock price today а. b. Stock price tomorrow c. What will the balance sheet look like after the dividends are paid? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Cash Equity Fixed assets Total Total

Answer 1

Stock Price Today = Market value of equity/Number of shares	31.4
b.Price tomorrow = Price today - Dividend paid	30.25
c.
Dividends will be paid in the form of cash, hence cash will reduce
Cash	98,150	Equity	574,750
Fixed Assets	476,600
Total	574,750	Total	574,750