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Bowzer Co. has just received $3.7 million from the sale of one of its divisions. The...

Bowzer Co. has just received $3.7 million from the sale of one of its divisions. The company has 425,000 shares outstanding that sell for $85.53 per share. If the company issues the entire proceeds from the sale as a special dividend, what will the ex-dividend stock price be? Ignore taxes.

Multiple Choice $78.74 $85.53 $85.42 $94.24 $76.82

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Answer #1

Dividend per share will be = Distributable amount / no of Outstanding shares

= 3,700,000 / 425,000  

= $ 8.71

Ex dividend Price = Current Price - Dividend

= 85.53 - 8.71

= $ 76.82

Ex dividend Price is $ 76.82

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