question archive At this time, the company had Rp
At this time, the company had Rp
Subject:FinancePrice:2.86 Bought3
At this time, the company had Rp. 500 billion of cash available to be distributed to shareholders and Rp. 9,500 billion in other assets. The company's equity capital is IDR 10,000 billion. It is assumed that the company's book value is equal to its market value. The company has 250 million shares in circulation and a net profit of IDR 1,400 billion. What is the price of the company's shares after using the available cash to be distributed in the form of cash dividends?
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After payment of 500 billion of dividend company's cash will reduce by 500 billion on the asset side and equity capital will also reduce by 500 billion (reduction from reserves and surplus)
Therefore new Equity = 10,000 - 500 = 9500
Since it is given that book value is equal to the market value therefore new market value of the firm = 9500
To calculate per share value we will divide the market value of the firm by number of shares
Share Price = 9,500 / 250 = 38
Therefore price per share post dividend distribution will be 38
