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# Answer to Question #99973 in Finance for sofia

Question #99973
As a stockholder in Randolph Corporation, you receive its annual report.
In the financial statements, Randolph has reported that the after-tax (net)
income is $300 million. With 150 million shares of common stock outstanding, Randolph announced to distribute$100 million of dividends
to its shareholders. The stock is now sold for $20 per share. i. Calculate the value of investor’s wealth who holds 4,000 shares of Randolph Corporation before the ex-dividend date, ii. Calculate the dividend income of an investor who holds 4,000 shares of Randolph Corporation until the ex-dividend date, iii. Calculate the value of shareholding on the ex-dividend date of an investor who holds 4,000 shares of Randolph Corporation. 1 Expert's answer 2019-12-06T09:38:56-0500 Finance We need to Calculate the value of investor’s wealth, dividend income of an investor and value of shareholding on the ex-dividend date. Solution: (i). Given, Number of shares = 4000 Sale price of a share =$20

Investor’s wealth who holds 4,000 shares of Randolph Corporation before the ex-dividend date

"= Number \\space of \\space shares \\times sale \\space price"

"=4000 \\times 20 = \\$80000" (ii). Dividend income of an investor who holds 4,000 shares of Randolph Corporation until the ex-dividend date "= Dividend \\space per \\space share \\times number \\space of \\space shares \\space hold" "= \\frac {100} {150} \\times 4000 = \\$2666.67"

(iii).

The value of shareholding on the ex-dividend date of an investor who holds 4,000 shares of Randolph Corporation.

"= Number \\space of \\space shares \\times \\frac {market value }{ Number \\space of shares \\space of common \\space stock}"

"= 4000 \\times \\frac {3000 million - 100 million} {150 million}"

"= 4000 \\times 19.33 = \\$77333.33" ( Market value of Randolph Corporation before Ex-Dividend Date =$ 20 per share * 150 million shares = $3000 million) Answer: Yes. Dividend income of an investor who holds 4,000 shares of Randolph Corporation until the ex-dividend date =$80000

Dividend income of an investor who holds 4,000 shares of Randolph Corporation until the ex-dividend date =$2666.67 The value of shareholding on the ex-dividend date of an investor who holds 4,000 shares of Randolph Corporation=$77333.33

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