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:

Abstract Pattern

A concept or idea that lacks physical form, representing a complex set of relationships or processes in a simplified or theoretical way.

Perceptual Patterns

The regular and predictable ways in which people perceive the world around them, often influenced by culture, experience, and psychological factors.

Pattern

A repeated decorative design or a regularly occurring sequence of events, behaviors, or characteristics in a particular context.

Collection

The act of gathering items or data together from different sources or the group of items that has been gathered.