The balance sheet for Pie Crust, Inc., is shown here in market value terms. Ther

ID: 2622272 • Letter: T

Question

The balance sheet for Pie Crust, Inc., is shown here in market value terms. There are 28,000 shares of stock outstanding.

The company has declared a dividend of $1.60 per share. The stock goes ex-dividend tomorrow. Ignore all tax effects.

What is the stock selling for today? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

What will it sell for tomorrow? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

The balance sheet for Pie Crust, Inc., is shown here in market value terms. There are 28,000 shares of stock outstanding.

1) Today's share price = Today's Equity/Total shares outstanding = 733040/28000 = $26.18

2)Tomorrow' share price = Tomorrow's Equity /Total shares outstanding = (733040 - 1.6*28000)/28000 = $24.58

3)After tax balance sheet

ASSETS

Cash = 176000- 28000*1.6 = $131200

Fixed assets = $557040

Total assets = $688240

LIABILITIES + EQUITY

Equity = 733040 - 28000*1.6 = $688240

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