The board of directors of Complex Computers has decided to declare a 20 percent stock dividend. The company’s common stockholders’ equity is as follows:

Pre–Stock Dividend Common Stockholders’ Equity Common stock ($1 par, 100,000 shares) $ 100,000 Contributed capital in excess of par 900,000 Retained earnings 5,000,000 Total common stockholders’ equity $6,000,000 The common stock of Complex Computers is currently trading at $80 a share.

The company is growing rapidly and has never paid a cash dividend.

a. Show the company’s common stockholders’ equity after the stock dividend.

b. Calculate the post–stock dividend price of Complex Computers stock, assuming no other changes occur. P-698