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. Verbal Communications, Inc., has 14,000 shares of stock outstanding with a par value of $1...

. Verbal Communications, Inc., has 14,000 shares of stock outstanding with a par value of $1 per share and a market value of $46 per share. The firm just announced a 100 percent stock dividend. What is the market value per share after the dividend?

2. Della's Pool Halls has 12,000 shares of stock outstanding with a par value of $1 per share and a market price of $39 a share. The firm just announced a 4-for-3 stock split. How many shares of stock will be outstanding after the split?

3. Alfonzo's Italian House has 25,000 shares of stock outstanding with a par value of $1 per share and a market price of $36 a share. The firm just announced a 5-for-3 stock split. What will the market price per share be after the split?

4. Plyler Cabinets declared a dividend of $1.20 a share on May 15 to holders of record on Monday, June 1. The dividend is payable on June 15. Sara purchased 500 shares of Plyler Cabinets stock on Friday, May 29. How much dividend income will she receive on June 15 from Plyler Cabinets?

Solutions

Expert Solution

Compute the shares outstanding after stock dividend, using the equation as shown below:

Shares outstanding = Shares outstanding before stock dividend*(1 + Dividend percentage)

                                = 14,000 shares*(1 + 1)

                                = 28,000 shares

Hence, the shares outstanding after the stock dividend is 28,000 shares.

Compute the market price per share after the stock dividend, using the equation as shown below:

Market price = (Shares outstanding before stock dividend*Market price)/ Shares outstanding after the stock dividend

                      = (14,000 shares*$46)/ 28,000 shares

                      = $644,000/ 28,000 shares                     

                      = $23 per share

Hence, the market price per share after the stock dividend is $23.

jeff jeffy answered 2 years ago
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