A fiRm Has a Market Value Equal to Its Book

question 223

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:

Resistance To Change

The reluctance or refusal to adapt to new conditions, policies, or technologies in a workplace or other environment.

Highly Dependent

A state or condition where individuals, systems, or organizations rely significantly on external factors or support for functioning, stability, or survival.

Boss

A person who is in charge of a worker, group, or organization, and has authority over them.

Personal Endorsements

An individual's public expression of support, approval, or recommendation of a product, service, or concept.