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o-na [289]
3 years ago
10

Glendale Paving currently has 120,000 shares of stock outstanding that sell for $54 per share. Assume no market imperfections or

tax effects exist. What will the new share price be if the firm declares a 40 percent stock dividend
Business
1 answer:
emmasim [6.3K]3 years ago
5 0

Answer:

The new price will be $38.57.

Explanation:

The initial price of 120,000 outstanding shares is $54.

There are no market imperfections or taxes.

The firm declares a dividend of 40%.

The new share price will be

= Initial\ price\times(\frac{1}{1+ dividend} )

= 54\times(\frac{1}{1+0.4} )

= 54\times\frac{1}{1.4}

= 54\times0.71

= $38.57

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