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

Question

The balance sheet for Pie Crust, Inc., is shown here in market value terms. There are 25,000 shares of stock outstanding.

The company has declared a dividend of $1.30 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 25,000 shares of stock outstanding.

Explanation / Answer

Details Amt $/nos No of outstanding Stocks            25,000 Market value of equity          696,750            1 Market Price per share =696750/25000= $          27.87 Dividend decared per share                   1.30 Total Dividend to be paid=25000*1.3=            32,500 Market Value of Equity after dividend pay=696750-32500=          664,250            2 Market price per share after dividend payout=664250/25000= $          26.57 Market price tomorrow will be $26.57            3 Balance sheet after dividend payment Asset Amt $ Equity Amt $ Cash          123,500 Equity                664,250 Fixed Asset          540,750 Total          664,250                664,250

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