The balance sheet for Throwing Copper, Inc., is shown here in market value terms

Question

The balance sheet for Throwing Copper, Inc., is shown here in market value terms. There are 27,000 shares of stock outstanding. Market Value Balance Sheet Cash $ 117,000 Fixed assets 489,960 Equity $ 606,960 Total $ 606,960 Total $ 606,960 The company has declared a dividend of $1.40 per share. The stock goes ex dividend tomorrow. Ignore all 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.) Stock price $ What will it sell for tomorrow? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Stock price $ 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.) Cash $ Fixed assets Equity $ Total $ Total $

Explanation / Answer

Answer 1 Price= Market Value of Equity/share outstanding Price= 606960/27000 Price= 22.48 Answer 2 Dividend paid= 27000*1.4 Dividend paid= 37800 New Equity= old equity-dividend paid/share outstanding New Equity= 606960-37800/27000 New Equity= 21.08 Answer 3 Balance sheet(after dividend) Cash 79200 Equity 569160 Fixed asset 489960 Total asset 569160 Total Liability and Equity 569160

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