Bruno's Has 7,000 Shares Outstanding with a Par Value of £1.00

question 58

Multiple Choice

Bruno's has 7,000 shares outstanding with a par value of £1.00 per share and a market value of £12 per share.The statement of financial position shows £7,000 in the ordinary equity account, £58,000
In the additional paid in capital account, and £32,500 in the retained earnings account.The firm just
Announced a 50% (large) stock dividend.What is the market value per share after the dividend?

• A)£6.00
• B)£8.00
• C)£9.00
• D)£10.50
• E)£12.00

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Definitions:

Tax-Exempt

A status of financial or material exemption from the requirement to pay taxes granted by government authorities.

Present Value

The now-value of a later financial sum or succession of monetary flows, using a determined rate of return as the basis for calculation.

Interest Rate

This is the percentage of a sum of money charged for its use.

Equilibrium Interest Rate

The equilibrium interest rate is the interest rate at which the supply of loanable funds equals the demand, reflecting a balance in the financial market.