Problem 10-03

Jersey Medical earns $11.00 a share, sells for $70, and pays a $4 per share dividend. The stock is split two for one and a $2 per share cash dividend is declared.

What will be the new price of the stock? Round your answer to the nearest dollar.

$

If the firm's total earnings do not change, what is the payout ratio before and after the stock split? Round your answers to one decimal place.

Payout ratio before the split: %

Payout ratio after the split: %