On July 15, 2015, Tina declared and issued a 15 percent stock dividend. Prior to this...
On July 15, 2015, Tina declared and issued a 15 percent stock dividend. Prior to this dividend, Tina had 50,000 shares of $10 par value common stock issued and outstanding. The market value of Tina’s common stock on July 15, 2015, was $23 per share. As a result of this stock dividend, by what amount would Tina’s total stockholders' equity increase or decrease?
All else equal, what would we expect the approximate market value per share of Tina’s stock to be after the dividend?
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Homework Answers
Solution:
As a result of this stock dividend, Tina’s total stockholders' equity will remain the same as one portion of retained earnings will become part of paid in capital only keeping total stockholder's equity will be the same.
Market value per share before stock dividend = $23
Market value per share after stock dividend = (50000*$23) / (50000*115%) = $20 per share
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On July 15, 2015, Tina declared and issued a 15 percent stock
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On July 15, 2015, Tina declared and issued a 15 percent stock dividend. Prior to this dividend, Tina had 50,000 shares of $10 par value common stock issued and outstanding. The market value of Tina’s common stock on July 15, 2015, was $23 per share. As a result of this stock dividend, by what amount would Tina’s total stockholders' equity increase or decrease? All else equal, what would we expect the approximate market value per share of Tina’s stock to...
On July 15, 2015, Tina declared and issued a 15 percent stock dividend. Prior to this...
On July 15, 2015, Tina declared and issued a 15 percent stock dividend. Prior to this dividend, Tina had 50,000 shares of $10 par value common stock issued and outstanding. The market value of Tina’s common stock on July 15, 2015, was $23 per share. All else equal, what would we expect the approximate market value per share of Tina’s stock to be after the dividend?
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