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

Question

The balance sheet for Ferguson Corp. is shown here in market value terms. There are 9,000 shares of stock outstanding Market Value Balance Sheet Cash Fixed assets 400,000 $ 44,600 Equity $ 444,600 Total $ 444,600 Total $ 444,600 The company has declared a dividend of $1.50 per share. The stock goes ex dividend tomorrow. lgnoring any 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.) Stock price per share Ignoring any tax effects, what will it sell for tomorrow? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) 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.) Balance Sheet Cash Fixed assets Equity Total Total

Explanation / Answer

Ferguson Corp. Market Value Balance sheet Cash $44,600 Equity $444,600 Fixed Assets $400,000 Total $444,600 Total $444,600 The company has declared dividend $1.50 per share No of Equity shares outstanding 9000 Ex-dividend date Tomorrow Stock price today? Equity Value $444,600 No of Equity shares 9000 Stock price today: $49.40 per share Stock price tomorrow? Equity Value $444,600 Less: Dividend paid $13,500 (9000*$1.50) Equity value ex-dividend $431,100 No of Equity shares 9000 Stock price tomorrow: $47.90 per share-Ex-dividend Market Value Balance sheet(Ex-dividend) Cash $31,100 Equity $431,100 Fixed Assets $400,000 Total $431,100 Total $431,100 Note: Dividend paid has been deducted from Equity and Cash.

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