Ajax Inc of Toronto Has a Market Value Equal to Its

question 140

Multiple Choice

Ajax Inc of Toronto has a market value equal to its book value. Currently, the firm has excess cash of $2,000 and other assets of $13,000. Equity is worth $15,000. The firm has 1,000 shares of stock outstanding and net income of $2,500. By what percent does the stock price per share change if the firm pays out its excess cash as a cash dividend?

• A) -16.67 percent
• B) -13.33 percent
• C) 0.00 percent
• D) 13.33 percent
• E) 16.67 percent