Consider the case of Mainway Toys Co: Mainway Toys Co. currently has 20,000 shar
ID: 2766550 • Letter: C
Question
Consider the case of Mainway Toys Co: Mainway Toys Co. currently has 20,000 shares of comon stock outstanding. Its management believes taht its current stock price of $110 per share is too high. The company is planning to conduct stock splis in the ratio of 3 for 1. If Mainway Toys Co. declares 3 for 1 stock split.
Weghorst Co. is one of Mainway Toys Co's leading competitors. Weghorst Co's market intelligence researchteam shares Mainway Toys Co.'s plans of announcing a stock split, influencing the distribution policy makers. Consequently, excutives at Weghorst co. decide to offer stock dividends to its shareholds. Weghorst currently has 2,300,000 shares of common stock outstanding.
If the firm pays a 3% stock dividend, what will be thetotal number of shares outstanding after the stock dividend? PlEASE SHOW WORK.
Explanation / Answer
The total number of shares outstanding after the stock dividend = 2,300,000 x 1.03 = 2,369,000 shares