Jersey Medical earns $11.50 a share, sells for $90, and pays a $8 per share dividend. The stock is split two for one and a $4 per share cash dividend is declared. What will be the new price of the stock? Round your answer to the nearest dollar. $   If the firm's total earnings do not change, what is the payout ratio before and after the stock split? Round your answers to one decimal place. Payout ratio before the split:   % Payout ratio after the split:   %

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Problem 10-03

Jersey Medical earns $11.50 a share, sells for $90, and pays a $8 per share dividend. The stock is split two for one and a $4 per share cash dividend is declared.

  1. What will be the new price of the stock? Round your answer to the nearest dollar.

    $  

    1. If the firm's total earnings do not change, what is the payout ratio before and after the stock split? Round your answers to one decimal place.

      Payout ratio before the split:   %

      Payout ratio after the split:   %

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