Solved by Expert Tutors
Solved by Expert Tutors
Question

 P14-11 Stock dividend: Investor John McKay holds 500 common shares

of Smart Life Corporation. The corporation has 50,000 shares outstanding. The current price per share is $25. Smart Life Corporation has reported earnings available to common stockholders of $220,000. The firm intends to retain its earnings and pay a 10% stock dividend. 


a. Calculate the current earnings per share.
b. What is John's percentage of ownership of Smart Life Corporation before the stock dividend?
c. What is John's percentage of ownership of Smart Life Corporation after the stock dividend?
d. What do you expect the market price of the stock to be after the stock dividend?
e. Discuss the implication of a stock dividend on the earnings of Smart Life Corporation.

Step-by-step answer

entesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat,

lestie consequat, ultrices ac magna. Fusce dui lectus, c

ce dui lectus, congue vel laoreet ac, dictum vitae odio. Do

m risus ante, dapibus a molesti

ec aliquet. Lorem ipsum dolor sit amet, consectetur adipisci

ur laoreet. Nam risus

ic, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vi

ur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce

Subscribe to view the full answer

Subject: Business, Finance

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question