Question

The following data apply to Benevento Industries, Inc. (BII): Value of operations $1,000 million Short-term investments $100 million Debt $300 million Number of shares 100 million The company plans on distributing $100 million as dividend payments. What will the intrinsic per share stock price be immediately after the distribution

Answer 1

Answer: $7

Explanation:

Firstly, we'll calculate the equity which will be:

= Value of operations - Value of debt

= $1000 - $300

= $700

Then, the intrinsic price will be:

= Equity/Number of shares

= $700/100

= $7

Therefore, the intrinsic per share stock price immediately after the distribution will be $7