A Firm Has a Market Value Equal to Its Book

question 12

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 250 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)$.25
• B)$.45
• C)$3.60
• D)$4.80
• E)$5.50

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Definitions:

External Benefit

A positive effect or advantage that extends beyond the direct parties involved in a transaction, affecting others who are not directly involved.

Childhood Vaccinations

Immunization shots given to children to protect them from serious diseases by building immunity.

Direct Regulation

involves government interventions that directly restrict or control the activities, decisions, or characteristics of enterprises.

Federal

Pertaining to a system of government where power is divided between a central authority and constituent political units (like states or provinces).