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Murphy's, Inc., has 31,850 shares of stock outstanding with a par value of $1 per share....

Murphy's, Inc., has 31,850 shares of stock outstanding with a par value of $1 per share. The market value is $13 per share. The balance sheet shows $87,650 in the capital in excess of par account, $31,850 in the common stock account, and $145,950 in the retained earnings account. The firm just announced a stock dividend of 12 percent. What will the market price per share be after the dividend?

$13.50

$13.00

$12.50

$11.61

$12.61

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Answer #1

D. $11.61

Total market value = 31,850 shares × $13 per share = $414,050

New number of shares outstanding = 31,850 shares × 1.12 = 35,672 shares

New market price per share = $414,050 / 35,672 shares

New market price per share = $11.61

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