Question
The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be $1 per share, and there are 20,000 shares of stock outstanding. The
The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be $1 per share, and there are 20,000 shares of stock outstanding. The market-value balance sheet for Payout is shown below.
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Problem #4:
Now suppose that Payout again changes its mind and decides to issue a 2% stock dividend instead of either issuing the cash dividend or repurchasing 2% of the outstanding stock. How would this action affect a shareholder who owns 100 shares of stock? Compare with your answers to problems 3 and 4.
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