Jenny hold 1000 shares of C corp. The C corp. has 12 million shares outstanding. The...

Jenny hold 1000 shares of C corp. The C corp. has 12 million shares outstanding. The value of assets of the C corp. is $400 million which includes $50 millions of cash. The C corp. is expected to pay $40 million as dividend. What Jenney should do if she needs a dividend of $4,900?

Expert Solution

C corporation has total asset of $400 Million.

Total asset after paymenet of Dividend = $400 Million - $40 Million =$ 360 Million.

Expected Dividend per share = $40 Million/ 12 Million share = $3.3333 per share

Expected price per share after payment of dividend = Value of assets after dividend/ No of shares

= $360 Million/12 Million

= $30 per share

Jenny will receive a dividend of (1000*$3.33)$3333.

Total expected amount she needed = $4900

henec balance amount can be get by selling the share.

share to be sold = ($4900-$3333) / $30 per share = 52.22 share approx

hence jenny need to sell 52.22 share after getting the dividend to get a total amount of $4900.

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jeff jeffy answered 2 years ago

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