Stock dividend: Investor Personal Finance Problem Security Data Company has 80,000 shares of common stock worth $35
Posted: Tue Jan 18, 2022 12:57 pm
Stock dividend: Investor Personal Finance
Problem Security Data Company has 80,000 shares of common stock
worth $35 per share. The firm most recently had earnings available
for common stockholders of $107,000, but it has decided to retain
these funds and is considering a 10% stock dividend in lieu of a
cash dividend.
a. Determine the firm's current earnings per share.
b. If Sam now owns 800 shares, determine his proportion of
ownership currently and under the proposed 10% stock dividend
plan.
c. Calculate the market price per share under the 10% stock
dividend plan.
d. For the proposed 10% stock dividend plan, calculate
the earnings per share after payment of the stock dividend.
e. What is the value of Sam's holdings under the 10%
stock dividend plan?
f. Should Sam have any preference with respect to the proposed
stock dividend?
Problem Security Data Company has 80,000 shares of common stock
worth $35 per share. The firm most recently had earnings available
for common stockholders of $107,000, but it has decided to retain
these funds and is considering a 10% stock dividend in lieu of a
cash dividend.
a. Determine the firm's current earnings per share.
b. If Sam now owns 800 shares, determine his proportion of
ownership currently and under the proposed 10% stock dividend
plan.
c. Calculate the market price per share under the 10% stock
dividend plan.
d. For the proposed 10% stock dividend plan, calculate
the earnings per share after payment of the stock dividend.
e. What is the value of Sam's holdings under the 10%
stock dividend plan?
f. Should Sam have any preference with respect to the proposed
stock dividend?