The company with the common equity accounts shown here has decided on a two-for-
ID: 2762655 • Letter: T
Question
The company with the common equity accounts shown here has decided on a two-for-one stock split. The firm’s 31-cent-per-share cash dividend on the new (postsplit) shares represents an increase of 5 percent over last year’s dividend on the presplit stock.
What is the new par value of the stock? (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 decided on a two-for-one stock split. The firm’s 31-cent-per-share cash dividend on the new (postsplit) shares represents an increase of 5 percent over last year’s dividend on the presplit stock.
Explanation / Answer
Requirement 1: The New Par value of the stock = $ 0.50 per share
Before split par value of the share = $ 1.00 per share,
Then stock split two for one stock split = $ 0.50 per share.
Requirement 2: Dividend per share last year = $ 0.59 per share.
After split dividend = $ 0.31 that ,means before split = $ 0.62 share.
The dividend $ 0.62 is 5% more than the last year
Then Last year dividend = 0.62 *100 /105 = 0.5904 or say $ 0.59 per share.