A Firm Has a Market Value Equal to Its Book

question 83

Multiple Choice

A firm has a market value equal to its book value. Currently,the firm has excess cash of $500 and other assets of $9,500. Equity is worth $10,000. The firm has 250 shares of stock outstanding and net income of $1,400. What will the stock price per share be if the firm pays out its excess cash as a cash dividend?

• A) $36
• B) $38
• C) $40
• D) $42
• E) $44

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Definitions:

Plea

A formal statement made by a defendant in court regarding their guilt or innocence concerning the charges against them.

Charges

Fees or prices asked for goods and services, or sums levied as penalties for breaking the law or conditions of a contract.

Recidivism

The tendency of a convicted criminal to reoffend.

Rehabilitation

A process aimed at restoring someone's physical, sensory, intellectual, or mental capabilities that have been lost or diminished.