Question

Giggle Inc reports the following abbreviated balance sheet: Cash = $10000 Other Asset = $17000 Debt...

Giggle Inc reports the following abbreviated balance sheet: Cash = $10000
Other Asset = $17000
Debt = $0
Equity = $27000
Number of shares outstanding = 3000

Giggle just paid a cash dividend of $0.50 per share. What is the new share price after the dividend payment?

$

Place your answer in dollars and cents without the dollar sign.

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Answer #1

Share Price before the Dividend = Equity Value / no of shares

= 27000 / 3000

= 9

Dividend paid = 3000 * 0.5 = 1500

Cash After dividend = 10,000 - 1500 = 8500

Other Assets = 17000

Equity will be = Cash + other Assets

= 8500 + 17000

= 25500

Share Value = 25,500 / 3000

=$ 8.5 / share

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