Health Systems Inc. is considering a 15 percent stock dividend. The capital accounts are as follows: Como stock (2,000,000 bare at $0 pasi Capital in excess of par Retained earning Set worth $20,000.00! 10,000, DDO 30,000, DDB 560,000,000 *The Increase in capital in excess of par as a result of a stock dividend is equal to the shares created times Market price - Par value). The company's stock is selling for $36 per share. The company had total earnings of $4,000,000 with 2,000,000 shares outstanding and earnings per share were $2.00. The firm has a P/E ratio of 18. a. What adjustments would have to be made to the capital accounts for a 15 percent stock dividend? Show the new capital accounts. (Do not round Intermediate calculations. Input your answers in dollars, not millions (e.g. $1,230,0001) Answer is complete and correct. Capital Accounts Come on stock 23,000,000 Capital inces of par 17 800,000 Retained camingo 19,200,000 Net worth 60,000,000 b. What adjustments would be made to EPS and the stock price? (Assume the P/E ratio remains constant.) (Do not round intermediate calculations and round your answers to 2 decimal places. Answer is complete and correct. EPS Stock pro 15 Is 1.74 31.30 c. How many shares would an investor have if he or she originally had 100? (Do not round Intermediate calculations and round your answer to the nearest whole share.) Answer is complete and correct. Number of shares 115 d. What is the investor's total investment worth before and after the stock dividend if the P/E ratio remains constant? (Do not round intermediate calculations and round your answers to the nearest whole dollar); Answer is complete but not entirely correct. Total Investment Before stock dividend After stock dividend 3,600 2007 e. Assume Mr. Heart, the president of Health Systems, wishes to benefit stookholders by keeping the cash dividend at a previous level of $1.10 in spite of the fact that the stockholders now have 15 percent more shares. Because the cash dividend is not reduced, the stock price is assumed to remain at $36. What is an investor's total investment worth after the stock dividend if he/she had 100 shares before the stock dividend? Total investment t. Under the scenario described in parte, is the investor better off? Yes NO 9. As a final question, what is the dividend yield on this stack under the scenario described in parte (Input your answer as a percent rounded to 2 decimal places.) Dividend yield
