Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Wilson Pharmaceuticals stock has done very well in the market during the last three years. It has risen from $ 4 5 to $ 7

Wilson Pharmaceuticals stock has done very well in the market during the last three years. It has risen from $45 to $70 per share. The firms current statement of stockholders equity is as follows:
Common stock (3 million shares issued at par value of $10 per share) $ 30,000,000
Paid-in capital in excess of par 19,000,000
Retained earnings 46,000,000
Net worth $ 95,000,000
a-1. How many shares would be outstanding after a two-for-one stock split?
Note: Do not round intermediate calculations. Input your answer in millions (e.g., $1.23 million should be entered as "1.23").
a-2. What would be its par value?
Note: Do not round intermediate calculations and round your answer to 2 decimal places.
b-1. How many shares would be outstanding after a three-for-one stock split?
Note: Do not round intermediate calculations. Input your answer in millions (e.g., $1.23 million should be entered as "1.23").
b-2 What would be its par value?
Note: Do not round intermediate calculations and round your answer to 2 decimal places.
c. Assume that Wilson earned $12 million. What would its earnings per share be before and after the two-for-one stock split? After the three-for-one stock split?
Note: Do not round intermediate calculations and round your answers to 2 decimal places.
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 17.50 stays the same.)
Note: Do not round intermediate calculations and round your answers to 2 decimal places.

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

Contemporary Financial Management Fundamentals

Authors: R. Charles Moyer, James R. McGuigan, Ramesh P. Rao

1st Edition

0324015771, 9780324015775

More Books

Students also viewed these Finance questions

Question

=+a. Write two different, but related, headlines.

Answered: 1 week ago