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:

Promotional Mix

A combination of marketing tools including advertising, sales promotion, public relations, personal selling, and direct marketing used to reach the target audience and fulfill the organization's overall goals.

Sales Promotion

Short-term incentives or activities aimed at encouraging the purchase or sale of a product or service.

Direct Marketing

A form of advertising where businesses communicate directly with customers through various media.

Promotional Mix

The combination of different marketing approaches, including advertising, sales promotion, personal selling, public relations, and direct marketing, used to achieve business goals.