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? Assume there is no information content to the dividend.
F. None of the above
The question belongs to Finance and it discusses about calculation of stock price per share with market value and book value being equal and the firm paying out excess cash as dividend.
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