Question

Use the following information to answer the questions below.

Market Value Statement of Financial Position

Cash

$    50,000

Dividends Payable

$           -

Fixed Assets

$ 350,000

Equity

$ 400,000

Total

$ 400,000

Total

$ 400,000

Total number of common shares outstanding:

10,000

Dividend per share:

$        2.00

What is the current market price per share?

Prepare the Market Value Statement of Financial Position once the dividends have been declared, but not yet paid.

Ignoring tax effects, what will be the market price per share tomorrow, if the stock goes ex-dividend tomorrow?

Prepare the Market Value Statement of Financial Position once the dividends have been paid.

Answer 1

1. Current Market Price Per Share = Total Equity / Stock O/s = $400000 / 10000 = $40

2. Market Value Statement once dividends declared but not yet paid

3. Ex-Dividend Market Price of Share = Total Equity after Dividend / Stock O/s = $380000 / 10000 = $38

4. Market Value Statement of Financial Position once the dividends have been paid