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Help with the below questions, show equations. Stock dividend: Investor. Sarah Warren currently holds 400 shares of Nutri-Foods. The firm has 40,000 shares outstanding. The
Help with the below questions, show equations.
| Stock dividend: Investor. Sarah Warren currently holds 400 shares of Nutri-Foods. The firm has 40,000 shares outstanding. The firm most recently had earnings available for common stockholders of $80,000, and its stock has been selling for $22 per share. The firm intends to retain its earnings and pay a 10% stock dividend. | |||||||||
| a. | How much does the firm currently earn per share? | ||||||||
| b. | What proportion of the firm does Sarah currently own? | ||||||||
| c. | What proportion of the firm will Sarah own after the stock dividend? Explain your answer. | ||||||||
| d. | What should be the stock price after the stock dividend? | ||||||||
| e. | Discuss what effect, if any, the payment of stock dividends will have on Sarahs share of the ownership and earnings of Nutri-Foods. | ||||||||
| Solution | |||||||||
| a. | How much does the firm currently earn per share? | ||||||||
| Earnings available for common stock holders | |||||||||
| Common stock outstanding | |||||||||
| Earnings per share | |||||||||
| b. | What proportion of the firm does Sarah currently own? | ||||||||
| Sarah's current shares | |||||||||
| Common stock outstanding | |||||||||
| Sarah's current percent | |||||||||
| c. | What proportion of the firm will Sarah own after the stock dividend? Explain your answer. | ||||||||
| Sarah's current shares | |||||||||
| 10% stock dividend plan | |||||||||
| Waller's shares with 10% dividend | |||||||||
| Weller's percent with 10% dividend | |||||||||
| d. | What should be the stock price after the stock dividend? | ||||||||
| Current market price | |||||||||
| Market price with 10% dividend | |||||||||
| e. | Discuss what effect, if any, the payment of stock dividends will have on Sarahs share of the ownership and earnings of Nutri-Foods. | ||||||||
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Handbook Of Frontier Markets Evidence From Middle East North Africa And International Comparative Studies
Authors: Panagiotis Andrikopoulos , Greg N. Gregoriou , Vasileios Kallinterakis
1st Edition
0128092009,0128094915
