1. Giggle Inc reports the following abbreviated balance sheet: Cash = $ 8000 Oth
ID: 2734349 • Letter: 1
Question
1. Giggle Inc reports the following abbreviated balance sheet: Cash = $8000
Other Asset = $20000
Debt = $0
Equity = $28000
Number of shares outstanding = 3000
Giggle just paid a cash dividend of $1.50 per share. What is the new share price after the dividend payment?
$ ________
Place your answer in dollars and cents without the dollar sign.
2. US Parcel Inc has 5500 shares of stock outstanding and a current stock price of $18.50 per share. The company has no debt. The company is currently short on cash and announces that instead of a cash dividend they will pay the following stock dividend to all shareholders: one new share of stock for each 2 shares held. What will the new price per share if US Parcel be after the stock dividend goes into effect.
$ _______
3. E-Ticket System has just made a big announcement: The firm will split its stock 6-for-one (6:1). E-Ticket's current price per share is $20 per share, and there are 1000 shares outstanding. What is the share price after the announcement?
$______
Explanation / Answer
1.) Share Price = (Total Asset - Debt) / No. Of Shares Outstanding Where, Cash after dividend payment = $8000-3000shares*$1.5 =$8000-$4500 =$3500 Share Price = (3500+20000)/3000 =7.83 2.) New Share Price = Market Value Before dividend / Old no. Of shares + New Issue =5500*$18.50 / (5500+2750) =12.33 3.) New Share Price = Market Value Before Announcement / Total No. Of shares after split =1000*20 / 6000 =3.33
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