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:

Sensory Stimulus

An external or internal event or factor that initiates a sensory response in an organism, leading to a potential change in behavior or physiological state.

Perception

The meaning a brain derives from a sensation.

Sensation

Detection of a stimulus.

Hair Cells

Sensory cells found in the inner ear that are responsible for converting sound vibrations into electrical signals that the brain can understand.