Sometimes companies pay dividends in the form of additional shares of stock instead of cash. The impact of making distributions in the form of stock dividends is reflected in the statement of stockholders' equity. Consider the case of the Saltwater Logistics Inc.: The pre-stock dividend common stockholders' equity statement for Saltwater Logistics Inc, is as follows: Suppose you own 100 shares of Saltwater Logistics's stock. Saltwater Logistics's stock is trading at a market price of $16 per share, and the company recently declared a 8% stock dividend. You are worried about the dilution of your earnings, so you'd like to make some calculations to evaluate the impact of the stock dividend on your investment. Based on your calculations, complete the following table: Saltwater Logistics Inc. Post-Stock Dividend Common Stockholders' Equity If Saltwater Logistics's pre-dividend earnings per share (EPS) was $2.40, then the post-distribution EPS will be, and the post-distribution market price of Saltwater Logistics's shares should be per share. After the distribution of the stock dividend, you would own 108 shares of Saltwater Logistics's stock, and the value of your wealth will be:(Note: Do not round intermediate calculation) $2,400 $1,600 $1,780 $2,220 Suppose the state in which Saltwater Logistics is registered levies a capital impairment law. What will be the maximum amount of dividends that Saltwater Logistics can distribute if the capital impairment provisions define capital as the par value of the firm's common stock and the capital in excess of par account? (Hint: Use the pre-distribution data to answer this question.) Sometimes companies pay dividends in the form of additional shares of stock instead of cash. The impact of making distributions in the form of stock dividends is reflected in the statement of stockholders' equity. Consider the case of the Saltwater Logistics Inc.: The pre-stock dividend common stockholders' equity statement for Saltwater Logistics Inc, is as follows: Suppose you own 100 shares of Saltwater Logistics's stock. Saltwater Logistics's stock is trading at a market price of $16 per share, and the company recently declared a 8% stock dividend. You are worried about the dilution of your earnings, so you'd like to make some calculations to evaluate the impact of the stock dividend on your investment. Based on your calculations, complete the following table: Saltwater Logistics Inc. Post-Stock Dividend Common Stockholders' Equity If Saltwater Logistics's pre-dividend earnings per share (EPS) was $2.40, then the post-distribution EPS will be, and the post-distribution market price of Saltwater Logistics's shares should be per share. After the distribution of the stock dividend, you would own 108 shares of Saltwater Logistics's stock, and the value of your wealth will be:(Note: Do not round intermediate calculation) $2,400 $1,600 $1,780 $2,220 Suppose the state in which Saltwater Logistics is registered levies a capital impairment law. What will be the maximum amount of dividends that Saltwater Logistics can distribute if the capital impairment provisions define capital as the par value of the firm's common stock and the capital in excess of par account? (Hint: Use the pre-distribution data to answer this question.)
