At the end of 2004, ABC Limited reported the following in shareholder's equity:

Common Shares, no-par value; authorized, unlimited shares; issued 14,400,000 shares - $18,800,000

Retained Earnings - $52,840,000

SE Total - $71,640,000

At this time, the shares were trading in the range of $4 to $6 per share on the public stock market. ABC ltd.'s board of directors is deciding on two alternative courses of action:

1. Declaring a 50% stock dividend, or 2. Executing a 3 for 2 stock split

Required

1. Prepare the shareholder's equity section for each alternative, assuming market value is used to capitalize the stock dividend.
2. What would the expected share price be in each alternative?
3. Which alternative would shareholder's prefer and why?
4. Which alternative would ABC Ltd. prefer and why?