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Problem #2: The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be $1 per share, and there are 20,000 shares of stock

Problem #2:

The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be $1 per share, and there are 20,000 shares of stock outstanding. The market-value balance sheet for Payout is shown below.

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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