Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Wilson Pharmaceuticals has done very well in the stock market during the last three years. Its stock has risen from $35 per share to $60
Wilson Pharmaceuticals has done very well in the stock market during the last three years. Its stock has risen from $35 per share to $60 per share. Its P/E ratio is 15.00. Its current statement of net worth is: Common stock (3 million shares issued; 10 million shares authorized) Retained earnings $ 42,000,000 48,000,000 Net worth $90,000,000 a. How many shares would be outstanding after a two-for-one stock split? (Enter the answer in millions.) Number of shares million b. How many shares would be outstanding after a three-for-one stock split? (Enter the answer in millions.) Number of shares million C. Assume Wilson earned $12 million. What would its EPS be before and after the two-for-one stock split? (Round the final answers to 2 decimal places.) EPS before split: EPS after 2:1 split EPS after 3:1 split d. What would the price per share be before and after the two-for-one and the three-for-one stock splits? (Assume the P/E ratio of 15.00 stays the same.) (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Price after 2-1 split Price after 3-1 split $ e. Should a stock split change the P/E ratio for Wilson? Yes O No
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started