Mini-Case You've been working for the local newspaper for several years, and you've finally got your own column, "Finance Questions: Ask the Expert." Your job is to field readers' questions that deal with finance. This week you are going to address two questions from your readers that have to do with dividends: Question 1. I own 8 percent of the Standlee Corporation's 30,000 shares of common stock, which most recently traded for a price of $98 per share. The company has since declared its plans to engage in a 2-for-1 stock split. a. What will my financial position be after the stock split com- pared to my current position? (Hint: Assume the stock price falls proportionately.) b. The executive vice president in charge of finance believes that the price will not fall in proportion to the size of the split but rather will fall only 45 percent because the presplit price is above the optimal price range. If she is correct, what will be my net gain from the split? Question 2. I am on the board of directors of the B. Phillips Corporation, and Phillips has announced its plan to pay divi- dends of $550,000. Presently, there are 275,000 shares outstand- ing, and the earnings per share are $6. It looks to me like the stock should sell for $45 after the ex-dividend date. I wonder what the result would be if the management decided to repur- chase stock instead of paying a dividend? a. What would be the repurchase price that would be equiva- lent to the proposed dividend (ignoring any tax effects)? b. How many shares should the company repurchase? c. I want to look out for the small shareholders. If someone owns 100 shares, do you think she or he would prefer that the company pay the dividend or repurchase stock?

You've been working for the local newspaper for several years. and you've finally got your own column. "Finance Questions: Ask the Expert" Your job is to field readers' questions that deal with finance. This week you are going to address two questions from your readen that have to do with dividends: Question 1. 1 own 8 pereent of the Standlee Corporation's 30.900 shares of common stock, which most recently traded for a price of $98 per share. The company hus since declared its plans to engage in a 2 for- 1 stock split. a. What will my financial position be after the stock split compared to my current position? (Hint: Assume the stock price falls proportionately) b. The executive vice president in charge of finance believes that the price will not fall in proportion to the size of the split but rather will fall only 45 percent because the presplit price is above the uptimal price range. If she is correct, what will be my net gas imm the split? Question 2.I am on the board of dinectors of the B. Phillips Corporation, and Phillips has announced its plan to pay dividends of $550,000. Presently, there are 275,000 shares outstant: ing. and the earnings per share are 56 . It looks to me like the stock should sell for $45 after the ex-dividend date. I wonder what the result would be if the management decided to repar. chase stock instead of paying a dividend? a. What would be the repurchase price that would be cquivelent to the proposed dividend (ignoring any tax effects)? b. How many shares should the company repurchase? c. I want to look out for the small shareholders. If sotecone owns 100 shares. do you think she or be would prefer that the company pay the dividend or repurchase stock