The following data apply to Garber Industries, Inc.(GII): $$\begin{array} { l r }
\text { Value of operations } & \$ 1,000 \
\text { Short-term investments } & \$ 100 \
\text { Debt } & \$ 300 \
\text { Number of shares } & 100
\end{array}$$ The company plans on distributing $100 as dividend payments.What will the intrinsic per share stock price be immediately after the distribution?
A) $6.32
B) $6.65
C) $7.00
D) $7.35
E) $7.72

Question

The following data apply to Garber Industries, Inc.(GII): $$\begin{array} { l r } 
\text { Value of operations } & \$ 1,000 \
\text { Short-term investments } & \$ 100 \
\text { Debt } & \$ 300 \
\text { Number of shares } & 100
\end{array}$$ The company plans on distributing $100 as dividend payments.What will the intrinsic per share stock price be immediately after the distribution?
A) $6.32
B) $6.65
C) $7.00
D) $7.35
E) $7.72

Quizplus · Accepted Answer

The intrinsic value of the stock is calculated as (Value of operations + Short-term investments - Debt - Dividends) / Number of shares = ($1,000 + $100 - $300 - $100) / 100 = $7.00 per share.

The Following Data Apply to Garber Industries, Inc The Company Plans on Distributing $100 as Dividend Payments