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  3. the balance sheet for solomon corporation is shown

The balance sheet for Solomon Corporation is shown here in market value terms. There are...

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Finance

The balance sheet for Solomon Corporation is shown here in market value terms. There are 30,000 shares of stock outstanding.

Cash Other Assets Total

Instructions:

200,000 1,800,000 2,000,000

Debt Equity Total

800,000 1,200,000 2,000,000

Market Value Balance Sheet ()

Consider the following alternatives:

  1. The company has declared a cash dividend of 4.00 per share. The stock goes ex dividend tomorrow. Ignoring any tax effects, what is the stock

    selling for today? What will it sell for tomorrow? What will the balance sheet look like after the dividends are paid? (5 points)

  2. Suppose that instead of cash dividend the company has announced it is going to repurchase 60,000 worth of stock. What effect will this transaction

    have on the equity of the firm? How many shares will be outstanding? What will the price per share be after the repurchase? (10 points)

  3. Suppose that instead of cash dividend or stock repurchase, the company has declared a 20 percent stock dividend. The stock goes ex dividend tomorrow. What will the ex-dividend price be? (5 points)

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