Question 1 Share Valuation The board of Santova Ltd is exploring ways to expand the number of shares outstanding in an effort to reduce the market price per share to a level that the firm considers more appealing to investors. The options under consideration are a 20% stock dividend and, alternatively, a 5-for-4 stock split. At the same time, the firm's equity account and other per-share information are as follows: Preferred stock Common stock ( 100,000 shares at R1 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity 10 100000 900000 700000 1700000 Share price EPS DPS PIE R30 R3,60 R1,08 R8,33 a) Show the effects on the equity account, EPS and P/E ratio of a 20% of a stock dividend. After stock 20% dividend Preferred stock Common stock ) Paid-in capital in excess of par Retained earnings Total stockholders' equity [2] [2] [2] [2] 10 Change in price Change in EPS Change in the number of Outstanding shares [1] [1] [1]