The company with the common equity accounts shown here has declared a 4-for-one

Question

The company with the common equity accounts shown here has declared a 4-for-one stock split when the market value of its stock is $33 per share. The firm½s 80-cent per share cash dividend on the new (post split) shares represents an increase of 25 percent over last year½s dividend on the presplit stock. What is the new par value per share? (Round your answer to 2 decimal places. (e.g., 32.16)) New par value $ per share What was last year?s dividend per share? (Round your answer to 2 decimal places. (e.g., 32.16)) Dividend per share $

Explanation / Answer

1) New Par Value per share = 1/4 = $ 0.25 per share

2) Dividend Per share = (0.80*4)/(1+25%) = $ 2.56 per Share

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