Evergreen Inc’s most recent Statement of Financial Position is given below.

Evergreen Inc. Statement of Financial Position As at Dec 31, 2021

Assets

1. Cash 425,000$
2. Accounts Payable 300,000$
3. Accounts Receivable 400,000$
4. Inventories 500,000$
5. Total Current Assets1,325,000$
6. Net Fixed Assets18,000,000$
7. Total Assets19,325,000$
8. Liabilities
9. 
   
10. Accounts Payable 300,000$
11. Other Current Liabilities 425,000$
12. Total Current Liabilities 725,000$
13. LT Debt 2,500,000$
14. Common Stock (85,000 shares o/s) 4,500,000$
15. Retained Earnings 11,600,000$
16. Total Liabilities & Owners Equity 19,325,000$

Additional Information:

• • Current market price per common share = $ 195
• • Before tax cost of borrowing (secured loan) = 5%
• • Weighted Average Cost of Capital =12%
• • Net Income for 2021 = $925,000
• • Target D/E ratio based on market values = 0.25
• • Corporate tax rate = 35%

a) Show the change in the Owner’s Equity section of the balance sheet if Evergreen declares a 15% stock dividend. What will be the new market price share?

b) Suppose instead of the stock dividend, Evergreen declares a 5 for 2 stock split. Show the change in the Owner’s Equity section of the balance sheet and the new stock price.