Matrix Corp Inc. is considering a $15$ percent stock dividend. The capital accounts are as follows:

Common stock $(4,000,000$ shares$)$ $$40,000,000$

Retained earnings $60,000,000$

Net worth $$100,000,000$

The company$$s stock is selling for $$40$ per share. The company had total earnings of $$12,000,000$ with $4,000,000$ shares outstanding and EPS were $$3\mathrm{.}00.$ The firm has a P$/$E ratio of $13\mathrm{.}33($rounded$).$

a$.$ Restate the equity section at year end after the $15$ percent stock dividend. Show the new capital accounts.

Common stock $

Retained earnings

Net worth $

b$.$ Restate the EPS and share price after the stock split $($Assume the P$/$E ratio remains constant$).($Do not round intermediate calculations. Round the final answers to $2$ decimal places.$)$

EPS $

Share price $

c$.$ How many shares would an investor have if he or she originally had $100?$

Number of shares shares

d$.$ What is the investor$$s total investment worth before and after the stock dividend if the P$/$E ratio remains constant? $($There may be a slight difference due to rounding.$)($Do not round intermediate calculations. Round the After stock dividend answer to $2$ decimal places.$)$

Total

investment

Before stock dividend $

After stock dividend $

e$-1.$ Assume Mr$.$ Neo, the president of Matrix Corp., wishes to benefit the shareholder by keeping the cash dividend at a previous level of $$1\mathrm{.}05$ in spite of the fact that the shareholders now have $15$ percent more shares. Because the cash dividend is not reduced, the share price is assumed to remain at $$40.$ What is an investor$$s total investment worth after the stock dividend if he$/$she had $100$ shares before the stock dividend?

Total investment $

e$-2.$ Under the scenario described in part e$-1,$ is the investor better off?

multiple choice

Yes

No

f$.$ What is the dividend yield on the shares under the scenario described in part e$-1?($Round the final answer to $2$ decimal places.$)$

Dividend yield $\%$