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 $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

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

Governance Of Financial Management

Authors: John Carver, Miriam Carver

1st Edition

0470392541, 9780470392546

More Books

Students also viewed these Finance questions

Question

What are the requirements for effective learning at work?

Answered: 1 week ago