After the dividend, the company's:
a. book value per share will become $6.31.
b. price-earnings ratio will adjust to 13.88.
c. shareholder value per share will amount to $18.60.
d. stock price will be $19.00.
e. earnings per share will equal $.94.
The result is: b
To determine the ex-dividend price per share on the day the dividend is distributed, we follow this method:
Ex-dividend Price = Share price before dividend - dividend amount per share
Ex-dividend price = $18.6 ($19 - $0.40)
Using this ex-dividend price, we can calculate the P/E ratio after the dividend.
P/E = $18.6/$1.34 = 13.88059
