In July 2015, the CFO of Rmy Cointreau decided to distribute a stock dividend to its shareholders

In July 2015, the CFO of Rémy Cointreau decided to distribute a stock dividend to its shareholders and set the overall dividend at €1.53 per share. Specifically, it was decided that the issue price of the new share will be €58.20 and the dividend payment in shares will be based on share records as on August 4, 2015.

a. If the firm had total net income for the year of €11,521,235.81 and had 4,710,253 shares of common stock outstanding before the cash or stock dividend, what was the firm’s earnings per share?

b. After paying the stock dividend, what is the firm’s earnings per share? How do you explain it?

c. If you owned 1,000 shares of stock before the stock dividend, how many euros of earnings did the firm earn from your 1,000-share investment? After the stock dividend is paid, how many euros of earnings did the firm earn on your larger share holdings? What effect would you expect from the payment of the stock dividend on your total investment in the firm?