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a. and b.: Round to 4 decimals places c: Multiple choice (Stock dividends) In the spring of 2016, the CFO of HTPL Distributing Company decided
a. and b.: Round to 4 decimals places
c: Multiple choice
(Stock dividends) In the spring of 2016, the CFO of HTPL Distributing Company decided to distribute a stock dividend to its shareholders. Specifically, the CFO proposed that the company pay 0.06 shares of stock to the holders of each share of common stock such that the holder of 1,000 shares of stock would receive an additional 60 shares of common stock. a. If the firm had total net income for the year of $12,000,000 and had 20,000,000 shares of common stock outstanding before the stock dividend, what was the firm's eanings per share? b. After paying the stock dividend, what was the firm's eamings per share? c. If you owned 1,000 shares of stock before the stock dividend, how many dollars of eanings did the firm earn from your 1,000-share investment? After the stock dividend was paid, how many dollars of earnings did the firm eam on your larger share holdings? What effect would you expect from the payment of the stock dividend on your total investment in the firm? a. Before the stock dividend, what was the firm's earnings per share? (Round to four decimal places.) b. After paying the stock dividend, what was the firm's eamings per share? $Round to four decimal places.) c. Which of the following statements regarding the effect of stock dividend on your $1,000 investment in the firm is true? (Select the best choice below.) O A The dollars of eamings the firm eams on your 1,000 share investment was S600 before the stock dividend and was $566 after, indicating that you would be worse off rom a stock dividend. O B. The dollars of earnings the firm earns on your 1,000 share investment was SS66 before the stock dividend and was S566 after, indicating that the gain from a stock dividend is truly an illusion. ? C The dollars o earnings he firm earns on your 1 000 share investment was S566 before the stock dividend and was s oar er ?ndica n that you would be better off om a stock dividend O D. The dollars of earnings the firm eams on your 1,000 share investment was $600 before the stock dividend and was $600 after, indicating that the gain from a stock dividend is truly an illusionStep by Step Solution
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