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11 September, 22:36

Murphy's, Inc. has 10,000 shares of stock outstanding with a par value of $1.00 per share. The market value is $8 per share. The balance sheet shows $32,500 in the capital in excess of par account, $10,000 in the common stock account and $42,700 in the retained earnings account. The firm just announced a 10% (small) stock dividend. What will the market price per share be after the dividend? A. $7.20 B. $7.27 C. $7.33 D. $8.00 E. $8.80

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  1. 11 September, 23:05
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    option B is correct

    market price per share be after the dividend is $7.27

    Explanation:

    Given data

    share = 10000

    stock value = $1.00 per share

    market value = $8 per share

    capital in excess = $32,500

    common stock account = $10,000

    retained earnings account = $42,700

    stock dividend = 10%

    to find out

    market price

    solution

    we will find here market price / share that is given here formula

    Market price is = (share * market value) : (share * 1.10)

    put here all these value we get

    Market price = (10000 * 8) : (10000 * 1.10)

    market price = 80000 : 11,000

    so market price = 7.27

    hence option B is correct

    market price per share be after the dividend is $7.27
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