Homework Answers
Total Number of outstanding Shares of Home Ltd. By 2016 with par
value $19,047,000 = 14,590,000
Par value of Share = Total Par value/Total No. of Outstanding
Shares = 19,047,000/1590000 = $1.3054
Retained Earnings = $53,050,000
Let's consider the Average Share price on Public Stock Exchange =
$6+$8/2 = $7
Stock Dividends (on Market value) = 50% of $7 = $3.5
| Before | Stock Dividend | Stock Split | |
| Common Shares, no par value, Authorized, unlimited shares, issued | 14,590,000 | = $(14,590,000 x 3.5) = $54,215,000 |
2/3 x $7 x 14,590,000= $4.67 = $68,086,667 |
| Retained Earnings | 53,050,000 | 53,050,000 | $53,050,000 |
Expected Share Price at share price of $4 at 50% Stock Dividend
option = 0.50 x$4 + $4 = $6
Expected Share Price at share price of $6 at 3 to 2 Stock Split
option = 2/3 x $6 = $4
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