The balance sheet for Chevelle Corp. is shown here in market value terms. There

Question

The balance sheet for Chevelle Corp. is shown here in market value terms. There are 5,000 shares of stock outstanding.

Market Value Balance Sheet Cash Fixed assets 320,000 S 43,800 Equity $363,800 Equity S $ 363,800 Total S 363,800 Tta$ loial $ 363,800 The company has declared a dividend of $1.50 per share. The stock goes ex dividend tomorrow. gnoring any tax effects, what is the stock selling for today? (Round your answer to 2 decimal places. (e.g., 32.16)) Stock selling price S per share gnoring any tax effects, what will it sell for tomorrow? (Round your answer to 2 decimal places. (e.g., 32.16)) Stock selling price S per share Ignoring any tax effects, what will the balance sheet look like after the dividends are paid? Balance Sheet Cash Equity Fixed assets Total Total

Explanation / Answer

Stock price before dividend = Equity value / No of shares

= 363800 / 5000 = 72.76

Stock price after dividend = Stock price before dividend - dividend per share = 72.76 - 1.50 = 71.26

Dividend declared = 5000 * 1.50 = 7500

Cash balance = 43800 - 7500 = 36300

Equity balance = 363800 - 7500 = 356300

Balance sheet:

Assets Amount Liabilities Amount Cash      36,300.00 Equity    356,300.00 Fixed Assets    320,000.00 Total    356,300.00 Total    356,300.00

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