C indicate the accounts and changes if any that will

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c. Indicate the accounts and changes, if any, that will result if the firm pays the dividends indicated in parts a and b .
d. Indicate the effect of an $80,000 cash dividend on stockholders’ equity.
Problem 14-11, p. 638
Candice Masesie M6 Written Assignment Corporate Finance Stock Dividend: Investor Sarah Warren currently hold 400 shares of Nutri-Foods. The firm has 40,000 shares outstanding. The firm most recently had earnings available for common stockholders of $80,000, and its stock has been selling for $22 per share. The firm intends to retain its earnings and pay a 10% stock dividend. a. How much does the firm currently earn per share? b. What proportion of the firm does Sarah currently own? c. What proportion of the firm will Sarah own after the stock dividend? Explain your answer. d. At what market price would you expect the stock to sell after the stock dividend? e. Discuss what effect, if any, the payment of stock dividends will have on Sarah’s share of the ownership and earnings of Nutri-Foods. a. Nutri-Foods currently has 40,000 shares outstanding and its stock has been selling for $22 per share. The earnings per share is equal to the firms retained earnings divided by the number of shares outstanding. $2
b. Sarah holds 400 shares of Nutri-Foods. The proportion of the firm that Sarah currently owns is equal to the number of shares owned divided by the total number of shares outstanding.
c. If Nutri-Foods pays a 10% stock dividend, the new number of shares outstanding after the stock dividend can be found using the following formula: New number of shares = current number of shares x (1 + % stock dividend)
d. At what market price would you expect the stock to sell after the stock dividend?

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