The balance sheet for Levy Corp. is shown here in market value terms. There are
ID: 2788292 • Letter: T
Question
The balance sheet for Levy Corp. is shown here in market value terms. There are 6,000 shares of stock outstanding.
Market Value Balance Sheet
Cash $ 44,900
Equity $ 474,900
Fixed assets 430,000
Total $ 474,900
Total $ 474,900
The company has declared a dividend of $1.80 per share.
The stock goes ex dividend tomorrow. Ignoring any tax effects, what is the stock selling for today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Current stock price $ per share
Ignoring any tax effects, what will it sell for tomorrow? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
New stock price $ per share
Ignoring any tax effects, what will the balance sheet look like after the dividends are paid? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
Market Value Balance Sheet
Cash $
Equity $
Fixed assets
Total $
Explanation / Answer
Cash 44900 Equity 474900 Fixed assets 430000 Total 474900 474900 No of shares 6000 Current stock price 79.15 Total equity/Total no of shares Dividend 1.8 per share Total dividend paid 10800 No of shares* Dividend per share Remaining equity 464100 Total equity - Total dividend paid New stock price 77.35 Remaining equity/Total no of shares New market value balance sheet Cash 34100 Equity 464100 Fixed assets 430000 Total 464100 464100 There will be changes in cash as dividend was paid so cash will reduce by total dividend paid amount Also the equity value will also reduce by the same amount so that both the sides will balance
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