A fiRm Has a Market Value Equal to Its Book

question 175

Multiple Choice

A firm has a market value equal to its book value. Currently, the firm has excess cash of $300 and other assets of $8,700. Equity is worth $9,000. The firm has 375 shares of stock outstanding and
Net income of $800. 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) $1.09
• B) $2.13
• C) $2.67
• D) $3.03
• E) $3.91

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Definitions:

Equivalent Units

A concept in costing used to allocate production costs between completed units and units still in process, by converting work in process into the number of completed unit equivalents.

First-In, First-Out

First-In, First-Out (FIFO) is an inventory valuation method where the earliest items purchased or produced are the first sold, affecting the cost of goods sold and inventory value.

Cost Of Production Report

A document summarizing the total cost of materials, labor, and overhead incurred in producing a product or service.

Department A

Department A is a placeholder name commonly used to represent a specific unit or section within a larger organization, focusing on a distinct set of tasks or functions.