Chandler Corporation has 1 million shares outstanding. The current price per share is $20. If the company decides to pay a $2 million dollar dividend, the company will have ________ shares outstanding worth approximately ________.
A) 900,000, $20 per share
B) 1,000,000, $20 per share.
C) 900,000, $22.22 per share.
D) 1,000,000, $18 per share.

Question

Quizplus · Accepted Answer

When a company pays a dividend, the share price typically decreases by the amount of the dividend per share. With a $2 million dividend and 1 million shares, the dividend is $2 per share, reducing the share price from $20 to $18. The number of shares outstanding remains 1,000,000.

Chandler Corporation Has 1 Million Shares Outstanding