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    Effect of cash dividends on share price

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    Please help with the following problem. Provide step by step calculations in an Excel spreadsheet.

    The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be $0.50 per share, and there are 20,000 shares of stock outstanding. The market-value balance sheet for Payout is shown on the following table.
    a. What price is Payout stock selling for today?
    b. What price will it sell for tomorrow? Ignore taxes.
    Assets Liabilities and Equity
    Cash $100,000 Equity $1,000,000
    Fixed Assets $900,000

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    https://brainmass.com/business/cash/effect-cash-dividends-share-price-226116

    Solution Preview

    Problem:

    The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be $0.50 per share, and there are 20,000 shares of stock outstanding. The market-value balance sheet for Payout is shown on the following ...

    Solution Summary

    This posting helps with accounting and bookkeeping. The share price before and after cash dividend is calculated in this solution. The explanation is given in an Excel spreadsheet.

    $2.19

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