Question
Wilson Pharmaceuticals' stock has done very well in the market during the last three years. It has risen from $25 to $50 per share. The
Wilson Pharmaceuticals' stock has done very well in the market during the last three years. It has risen from $25 to $50 per share. The firm's current statement of stockholders' equity is as follows:
Common stock (4 million shares issued at par value of $10 per share) $40,000,000
Paid-in capital in excess of par 12,000,000
Retained earnings 48,000,000
Net worth $ 100,000,000 a-
1. How many shares would be outstanding after a two-for-one stock split?
Number of shares ____________
a-2. What would be its par value?
b-1. How many shares would be outstanding after a three-for-one stock split?
b-2 What would be its par value?
c. Assume that Wilson earned $18 million. What would its earnings per share be before and after the two-for-one stock split? After the three-for-one stock split?
EPS before ___________
EPS after 2-for 1- split ___________
EPS after 3-for1 split ___________
d. What would be the price per share after the two-for-one stock split? After the three-for-one stock split? (Assume that the price-earnings ratio of 11.11 stays the same.)
EPS after 2-for 1- split ___________
EPS after 3-for1 split ___________
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