The market value balance sheet for Tidwell Manufacturing is shown here. Tidwell
ID: 2762654 • Letter: T
Question
The market value balance sheet for Tidwell Manufacturing is shown here. Tidwell has declared a 30 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 20,000 shares of stock outstanding.
What will the ex-dividend price be? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
The market value balance sheet for Tidwell Manufacturing is shown here. Tidwell has declared a 30 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 20,000 shares of stock outstanding.
Explanation / Answer
Market value of Equity = $ 600000
No of Shares = 20000
Market value per share = $ 600000/20000= $ 30 per share
Dividend per share= 30% of $ 30 = $ 9 per share
Ex dividend price = $ 30- $ 9 = $ 21
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