The company with the common equity accounts shown here has declared a 5-for-one
ID: 1171895 • Letter: T
Question
The company with the common equity accounts shown here has declared a 5-for-one stock split when the market value of its stock is $31 per share. The firm’s 80-cent per share cash dividend on the new (postsplit) shares represents an increase of 20 percent over last year’s dividend on the presplit stock.
What is the new par value per share? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
What was last year's dividend per share? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
The company with the common equity accounts shown here has declared a 5-for-one stock split when the market value of its stock is $31 per share. The firm’s 80-cent per share cash dividend on the new (postsplit) shares represents an increase of 20 percent over last year’s dividend on the presplit stock.
Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount par value per share before split 1.00 New par value = 1/5 0.20 New no of shares = 465000*5 2,325,000.00 Dividend per share 0.80 Total dividend in current year = 2325,000 *.80 1,860,000.00 Total dividend in last year = 1860,000/1.2 1,550,000.00 Old shares 465,000.00 last year's dividend per share = 1550,000/465,000 3.33