The market value balance sheet for Tidwell Manufacturing is shown here. The comp

Question

The market value balance sheet for Tidwell Manufacturing is shown here. The company has declared a 10 percent stock dividend. The stock goes ex dividend tomorrow (the chronology for a stock dividend is similar to that for a cash dividend). There are 25,000 shares of stock outstanding. Market Value Balance Sheet Cash $ 136,000 Debt $ 346,000 Fixed assets 810,000 Equity 600,000 Total $ 946,000 Total $ 946,000 What will the ex dividend price be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Ex dividend price $

Explanation / Answer

Answer:

Ex Dividend price = ( Equity - Dividend ) / No. of shares

= ($600000 - $60000 ) / 25000

= $540000/25000

= $21.60 per share. (answer)

Note: Dividend = 10% of Equity.

(Face value of equity is missing, Assuming Face value is equal to market value.)

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