Regular Dividends [LO1] The balance sheet for Ferguson Corp. is shown here in market value terms. There are 12,000 shares of stock outstanding.

Market Value balance sheet

Cash $ 52,900 Equity $387,900

Fixed Assets335,000

Total $387,900 $387,900

The company has declared a dividend of $1.30 per share. The stock ex dividend tomorrow. Ignoring any tax effects, what is the stock selling for today? What will it sell for tomorrow? What will the balance sheet look like after the dividends are paid?

6. Share Repurchase [LO4] In the previous problem, suppose Ferguson has announced itis going to repurchase $15,600 worth of stock. What effect will this transaction have on the equity of the firm? How many shares will be outstanding? What will the price per share be after the repurchase? Ignoring tax effects, show how the share repurchase is effectively thesame as a cash dividend.