A Firm Has a Market Value Equal to Its Book

question 81

Multiple Choice

A firm has a market value equal to its book value. Currently, the firm has excess cash of $400 and other assets of $7,600. Equity is worth $8,000. The firm has 200 shares of stock outstanding and net income of $900. The firm has decided to pay out all of its excess cash as a cash dividend. What will the earnings per share be after the dividend is paid?

• A) $.25
• B) $.45
• C) $2.50
• D) $3.80
• E) $4.50

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Definitions:

Minerals

Naturally occurring inorganic substances with a definite chemical composition and, usually, a distinct crystalline form.

Real Estate

Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water.

Trade Fixtures

Items attached to a rented space or building by a tenant, used in conducting business, that can typically be removed upon lease termination.

Real Estate

Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature.