A Firm Has a Market Value Equal to Its Book

question 60

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) $0.25
• B) $0.45
• C) $2.50
• D) $3.80
• E) $4.50

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Definitions:

Bodily Health

The overall physical well-being of a person, including fitness level, the absence of disease, and the condition of bodily functions.

Watson

Refers to John B. Watson, an American psychologist who established the psychological school of behaviorism, emphasizing the study of observable behavior.

Allocare

The care of children by individuals other than their biological parents, often part of a community or social support system.

Biological Parents

Individuals who have conceived and given birth to, or provided the genetic material for a child.