Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Stock dividend: Investor Personal Finance Problem Security Data Company has 40,000 shares of common stock worth $43 per share. The firm most recently had earnings

image text in transcribed

Stock dividend: Investor Personal Finance Problem Security Data Company has 40,000 shares of common stock worth $43 per share. The firm most recently had earnings available for common stockholders of $116,000, but it has decided to retain these funds and is considering a 10% stock dividend in lieu of a cash dividend. a. Determine the firm's current earnings per share. b. If Sam now owns 800 shares, determine his proportion of ownership currently and under the proposed 10% stock dividend plan. c. Calculate the market price per share under the 10% stock dividend plan. d. For the proposed 10% stock dividend plan, calculate the earnings per share after payment of the stock dividend. e. What is the value of Sam's holdings under the 10% stock dividend plan? f. Should Sam have any preference with respect to the proposed stock dividend? a. The firm's current earnings per share is $ (Round to the nearest cent.) b. If Sam currently owns 800 shares of the firm's stock, the proportion of the firm Sam currently owns is %. (Round to two decimal places.) The proportion of the firm Sam will own after the 10% stock dividend is %. (Round to two decimal places.) c. If Security pays a 10% stock dividend, the market price of stock after the dividend is $. (Round to the nearest cent.) d. The firm's earnings per share after payment of the stock dividend is $ (Round to the nearest cent.) e. The value of Sam's holdings before the stock dividend is $(. (Round to the nearest dollar.) The value of Sam's holdings after the stock dividend is $. (Round to the nearest dollar.) f. Should Sam have any preference with respect to the proposed stock dividend plan? (Select the best answer below.) O A. Sam should prefer a 10% stock dividend because he will have more shares. OB. Sam should prefer a 10% stock dividend because his total value will be significantly more. Camchand houn na nrofaransa harauca hie total value will remain accantially, the coma Click to select your answer(s)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Managerial Finance

Authors: Lawrence J. Gitman, Chad J. Zutter

13th Edition

9780132738729, 136119468, 132738724, 978-0136119463

More Books

Students also viewed these Finance questions

Question

Explain in detail the different methods of performance appraisal .

Answered: 1 week ago

Question

(4) What level of commitment do people have towards the strategy?

Answered: 1 week ago

Question

(2) What do they not do so well?

Answered: 1 week ago

Question

(5) How does it help you make decisions about resources and budget?

Answered: 1 week ago