Question

Tronic Financial corporation is a financial services holding company headquartered in Ithaca,New York, that offers banking insurance and wealth management service. It pays cash dividends quarterly and also issues stock dividends periodically.

3. Tronic issued 9% stock dividends in 1995, 2003, 2005, 2006, 2010. In 1998, True issued a three-for-two split. If an investor purchased 800 shares in 1994, how many shares would the investor have in 2012?

Answer 1

Number of shares in 1994 = 800

Stock dividend in 1995 = 9%

= 800 x 9%

= 72

Number of shares in 1995 = Number of shares in 1994 + Stock dividend in 1995

= 800 + 72

= 872

In 1998, True issued a three-for-two split.

Thus, in 1998, number of shares became = 872 x 3/2

= 1,308

Stock dividend in 2003 = 9%

= 1,308 x 9%

= 118 (rounded to nearest whole number)

Number of shares in 2003 = Number of shares in 1998 + Stock dividend in 2003

= 1,308 + 118

= 1,426

Stock dividend in 2005 = 9%

= 1,426 x 9%

= 128 (rounded to nearest whole number)

Number of shares in 2005 = Number of shares in 2003 + Stock dividend in 2005

= 1,426 + 128

= 1,554

Stock dividend in 2006 = 9%

= 1,554 x 9%

= 140 (rounded to nearest whole number)

Number of shares in 2006 = Number of shares in 2005 + Stock dividend in 2006

= 1,554 + 140

= 1,694

Stock dividend in 2010 = 9%

= 1,694 x 9%

= 152 (rounded to nearest whole number)

Number of shares in 2010 = Number of shares in 2006 + Stock dividend in 2010

= 1,694 + 152

= 1,846

In 2012, investor would have 1,846 shares.

Exact answer may slightly differ due to rounding off.

Please ask if you have any query related to the question. Thank you