Question

Assume that you own 14,000 shares of Briant Inc.'s common stock and that you currently receive cash dividends of $168 per share per year Required: af Briant Inc, declared a 5% stock dividend, how many shares of common stock would you receive as a dividend? b. Calculate the cash dividend per share amount to be paid after the stock dividend that would result in the same total cash dividend (as was received before the stock dividend). (Round your answer to 2 decimal places.) c. if the cash dividend remained at $168 per share after the stock dividend, what per share cash dividend amount without a stock dividend would have accomplished the same total cash dividend? (Round your answer to 3 decimal places.) a. Dividend shares b. Total cash dividend c Total cash dividend per share per share

Answer 1

Hi

Pls see below :

a) If 5% stock dividend declared:

The stock dividends are generally given as fractions paid per share. For example, in the given question company declared a stock dividend of 5%, which will require it to issue 0.05 shares for every share owned by shareholder, so the owner of 100 shares would receive 5 additional shares.

Answer is 14000x0.05 = 700 shares

New shares = 14000 +700 = 14700

b) Cash dividend per share:

Cash Dividend per share is the sum of declared dividends paid by a company for every share outstanding. The amount is calculated by dividing the total dividends paid out divided by no of shares outstanding.

Question Facts : Question said total cash dividend must remain same as if before stock dividend, and then asked to calculate dividend per share after stock dividend.

Total Cash Dividend you receive before stock dividend = Shares held x dividend per share i.e 14000x 1.68 = 23520

Cash Dividend per share = 23520/14700 = 1.60.

c) Cash dividend per share:

Question Facts : Cash dividend remained at 1.68 after stock dividend.

i.e Total dividend/no of shares = 1.68

i.e Total dividend/14700 =1.68

i.e Total dividend = 14700 x 1.68 = 24696

So as per question, if this 24696 must remain same but before stcok dividend. i.e with 14000 shares only.

Thefore per share cash dividend = 24696/14000 = 1.764