Sipacore Inc. is considering one of the three following courses of action: (1) paying a $0.50 cash dividend, (2) distributing a 5% stock dividend, or (3) effecting a 2-for-1 stock split. The current share price is $14 per share. Help Sipacore make its decision by completing the following chart (treat each possibility independently): Total assets (1) Before Action After Cash Dividend $1,196,000 $ 1,146,000 $ (2) After Stock Dividend 1,196,000 $ Total liabilities $243,000 $ 243,000 $ 243,000 $ Shareholders' equity Common shares 647,000 647,000 710,000 Retained earnings 306,000 256,000 306,000 Total shareholders' equity 953,000 903,000 953,000 Total liabilities and shareholders' equity $1,196,000 $ 1,146,000 $ 1,196,000 $ Number of common shares 100,000 100,000 105,000
Sipacore Inc. is considering one of the three following courses of action: (1) paying a $0.50 cash dividend, (2) distributing a 5% stock dividend, or (3) effecting a 2-for-1 stock split. The current share price is $14 per share. Help Sipacore make its decision by completing the following chart (treat each possibility independently): Total assets (1) Before Action After Cash Dividend $1,196,000 $ 1,146,000 $ (2) After Stock Dividend 1,196,000 $ Total liabilities $243,000 $ 243,000 $ 243,000 $ Shareholders' equity Common shares 647,000 647,000 710,000 Retained earnings 306,000 256,000 306,000 Total shareholders' equity 953,000 903,000 953,000 Total liabilities and shareholders' equity $1,196,000 $ 1,146,000 $ 1,196,000 $ Number of common shares 100,000 100,000 105,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Sipacore Inc. is considering one of the three following courses of action: (1) paying a $0.50 cash dividend, (2) distributing a 5% stock
dividend, or (3) effecting a 2-for-1 stock split. The current share price is $14 per share.
Help Sipacore make its decision by completing the following chart (treat each possibility independently):
Total assets
(1)
Before
Action
After Cash
Dividend
$1,196,000
1,146,000
(2)
After Stock
Dividend
1,196,000
$243,000
$
243,000
$
243,000
$
Total liabilities
Shareholders' equity
Common shares
647,000
Retained earnings
Total shareholders' equity
647,000
306,000
256,000
953,000
903,000
710,000
306,000
953,000
Total liabilities and shareholders' equity $1,196,000
$
1,146,000
$
1,196,000
Number of common shares
100,000
100,000
105,000
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