Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Vegas Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years but is currently contemplating some kind of

Vegas Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years but is currently contemplating some kind of dividend. The capital accounts for the firm are:

Common stock (2,300,000 shares) $11,500,000
Retained earnings 24,500,000
Net worth $36,000,000

The companys stock is selling for $30 per share, and it earned $6,900,000 during the year with 2,300,000 shares outstanding, indicating a P/E ratio of 10.

a. Restate the capital accounts at year end after the 10% stock dividend.

Common stock $
Retained earnings
Net worth

b. Restate the EPS and share price. (Assume the P/E ratio remains constant.) (Do not round intermediate calculations. Round the final answers to 2 decimal places.)

EPS $
Share price $

c. How many shares would an investor end up with if they originally had 110 shares?

Number of shares shares

d. If an investor originally had 110 shares, what is the investors total investment worth before and after the stock dividend if the P/E ratio remains constant? (Do not round intermediate calculations.)

Total investment
Before stock dividend $
After stock dividend $

e. This part of the question is not part of your Connect assignment.

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

Accounting

Authors: John Hoggett, Lew Edwards, John Medlin

6th Edition

0470806583, 978-0470806586

More Books

Students also viewed these Accounting questions