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The balance sheet for Universal Images plc is shown here in market value terms. There are 5,000 shares outstanding Market Value Balance Sheet Cash assets
The balance sheet for Universal Images plc is shown here in market value terms. There are 5,000 shares outstanding Market Value Balance Sheet Cash assets Equity 175,000 20,000 155,000 Total 175,000 Total 175,000 The company has declared a dividend of 1.5 per share. The equity goes ex dividend tomorrow. 1) Ignoring any tax effects, what are the shares selling for today? 2) Ignoring any tax effects, what will they sell for tomorrow? 3) What will the market value balance sheet look like after the dividends are paid? 4 Critically discuss the reasons why in the real-world we observe firms paying dividends instead of retaining cash. We also observe positive stock price responses to the announcement of dividend increases
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