Murphy's, Incorporated, has 32,650 shares of stock outstanding with a par value of $1 per share. The market value is $14 per share. The balance sheet shows $89,250 in the capital in excess of par account, $32,650 in the common stock account, and $161,950 in the retained earnings account. The firm just announced a stock dividend of 12 percent. What will the market price per share be after the dividend?Multiple Choice$13.50$13.39$14.39$14.00$12.50 PrevQuestion 4 of 10 Total4 of 10Visit question mapNe
Question
Murphy's, Incorporated, has 32,650 shares of stock outstanding with a par value of 14 per share. The balance sheet shows 32,650 in the common stock account, and 13.5014.3912.50 PrevQuestion 4 of 10 Total4 of 10Visit question mapNe
Solution
The market price per share after the dividend can be calculated by dividing the total market value of the stock by the new number of shares after the stock dividend.
First, calculate the total market value of the stock before the dividend: 32,650 shares * 457,100
Next, calculate the number of new shares to be issued as a result of the 12% stock dividend: 32,650 shares * 12% = 3,918 shares
Add the number of new shares to the original number of shares to get the new total number of shares: 32,650 shares + 3,918 shares = 36,568 shares
Finally, divide the total market value by the new number of shares to get the market price per share after the dividend: 12.50 per share
So, the market price per share after the dividend will be $12.50.
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