Question
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
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 (1 million shares issued at par value of $10 per share) | $ | 10,000,000 |
Paid-in capital in excess of par | 12,000,000 | |
Retained earnings | 43,000,000 | |
Net worth | $ | 65,000,000 |
a-1. How many shares would be outstanding after a two-for-one stock split? (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? (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? (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? (Do not round intermediate calculations and round your answer to 2 decimal places.)
c. Assume that Wilson earned $10 million. What would its earnings per share be before and after the two-for-one stock split? After the three-for-one stock split? (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 7.00 stays the same.) (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
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