Hi there, the question is at the bottom of this page, please show your calculation and fully explain whether you prefer cash dividend or stock dividend! Thank you very much! i'll give you a thumb up after you finsih the answer!!!

Assume that Cipper Corporation is authorized to issue an unlimited number of no par value common shares and has 100 000 shares outstanding. The business has the following balances in its shareholders' equity accounts:

Cipper Corporation Shareholders' Equity

Common Share $300 000

Retained Earnings $120 000

Total Equity $420 000

As can be seen, the company has enough in its Retained Earnings account to declare a dividend. The board of directors has decided to either pay a $1 per share cash dividend or issueone share for everyfour each shareholder owns. The current market price is $4 per share.

Value of Cash Dividend:100 000 outstanding shares x $1 =$100 000

Value of Stock Dividend:100 000 outstanding shares / 4 = 25 000 shares to be distributed at $4 each =$100 000

As can be seen, both dividend options are valued at $100 000. Let's look at the effect on total shareholders' equity:

Cipper Corporation Shareholders' Equity Before Dividend Cash Dividend Stock Dividend

Common Shares $300 000 $300 000 $300 000

Retained Earnings $120 000 $20 000 $120 000

Total Equity $420 000 $320 000 $420 000

Book Value per share (Equity / # shares) $4.20 $3.20 $3.36

Question: Assume that you owned 800 shares in Cipper Corporation, shown under The Effects of Dividends on Shareholders' Equity on the content page. Calculate the amount you would receive from a cash dividend and from a stock dividend. Which would you prefer? Fully explain why.