please explain so I may better know this material. thank you so much!!! Suppose
ID: 2398435 • Letter: P
Question
please explain so I may better know this material. thank you so much!!!
Suppose that you own 1.200 shares of Nocash Corp. and the company is about to pay a 25% stock dividend. The stock currently sells at $115 per share. a. What wil be the number of shares that you hold after the stock dividend is pad? (Do not round intermediate calculetions) Number of shares b. What will be the total value of your equity position after the stock dividend is paid? (Do not round intermediate calculations) Total value c. What will be the number of shares that you hold if the fim spits five-for-four instead of paying the stock dividend? Number of shares holdExplanation / Answer
Answer to Part a.
Current Common Stock Outstanding = 1,200 Shares
Stock Dividend declared = 25%
No. of Common Shares declared as Dividend = 1,200 * 25%
No. of Common Shares declared as Dividend = 300 Shares
Number of Shares held after Stock Dividend = 1,200 Shares + 300 Shares
Number of Shares held after Stock Dividend = 1,500 Shares
Answer to Part b.
Total Value of Equity after Stock Dividend is Paid = 1,200 * $115
Total Value of Equity after Stock Dividend is Paid = $138,000
As, Net Change in Equity on declared of Stock Dividend is Nil.
Answer to Part c.
Current Common Stock Outstanding = 1,200 Shares
Stock Split = 5 to 4 Shares
No. of Shares after Stock Split = 1,200 / 4 * 5
No. of Shares after Stock Split = 1,500 Shares
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