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 outstanding and net
Income of £1,400.What will the share price be if the ﬁrm pays out its excess cash as a cash
Dividend?

Question

Quizplus · Accepted Answer

The Answer of 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 outstanding and net
Income of £1,400.What will the share price be if the ﬁrm pays out its excess cash as a cash
Dividend?

A ﬁRm Has a Market Value Equal to Its Book