Shares in Growth Corporation are selling for $50 per share. There are 1 million shares outstanding....

Shares in Growth Corporation are selling for $50 per share. There are 1 million shares outstanding. The stock pays a 35 percent stock dividend. After the dividend: How many shares will be outstanding? What will be the price per share?

Please state your answer in millions and to 2 decimal places.

Outstanding shares = million

Price per share =

Expert Solution

Given in the problem
Shares Outstanding		1,000,000
Current Selling Price		$50
Stock Dividend		35%

Calculation of outstanding shares after stock dividend
	Total	In Millions
Shares outstanding before stock dividend	1,000,000	1
Stock Divined @35%	350,000	0.35
New Outstanding	1,350,000	1.35

Calculation of outstanding share price after stock dividend
Formula	Stock price before stock dividend
	(1+ percentage of stock dividend)

Formula	$50
	(1+ 35%)

New Stock price after stock dividend	$37.04

Hence the answer after stock dividend is
Outstanding shares =	1 Million
Price per share=	$37.04

Check:- After stock dividend there will be no change in the total value of stock outstanding
Action	Calculation	Answer
Before Stock dividend	1M shares * $50	$50M
After Stoch dividend	1.35M Shares * 37.03703	$50M

jeff jeffy answered 1 year ago

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