question archive 3) If Wyatt Oil distributes the $70 million as a dividend, then its stock price after the dividend will be closest to: A) $12
3) If Wyatt Oil distributes the $70 million as a dividend, then its stock price after the dividend will be closest to: A) $12
Subject:AccountingPrice:3.86 Bought8
3) If Wyatt Oil distributes the $70 million as a dividend, then its stock price after the dividend will be closest to:
A) $12.50
B) $14.00
C) $17.50
D) $26.50
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Step 1 : Calculation of current Share price :
Assume that share price is x
Assets = Liability +Equity
$600 Million = 250 Million + 20 Million x
$600 Million - 250 Million = 20 Million x
$350 Million = 20 Million x
x = $350 Million / 20
x = $17.50 Per Share
Step 2 : Calculation of Dividend Per share :
= $70 Million / 20 million share
= $7,00,00,000 / 2,00,00,0
= $3.50 Per Share
Step 3 : Share price after Dividend :
Stock price of per share will be reduce of dividend per share
Hence, share price will be
= $17.50 - $3.50
= $14
Share price after dividend will be $14 per share.
