Suppose that you own 3,400 shares of Nocash Corp. and the company is about to pay a 25% stock dividend. The stock currently sellsat $125 per share.a. What will be the number of shares that you hold after the stock dividend is paid? (Do not round intermediate calculations.)Number of sharesb. What will be the total value of your equity position after the stock dividend is paid? (Do not round intermediate calculations.)Total valuec. What will be the number of shares that you hold if the firm splits five-for-four instead of paying the stock dividend? (Do not roundintermediate calculations.)Number of shares held

Stock Dividends: A stock dividend is a dividend paid by a corporation to its shareholders. In this case, the shareholders receive shares instead of cash in the form of dividends. Number of shares =3400 Dividend =25% Selling price =125a. Calculate the number of shares after stock dividends as follows: Number of shares after stock dividends=3,400×1+25%=3,400×1.25=4,250 Therefore, the total number of shares after stock dividends is 4,250 shares. b. Calculate the total value of equity after stock dividend as follows: Total Value of Equity Before Stock Dividend=Number of Shares×Price Per Share=3,400×125=$425,000 Now, calculate price per share after stock dividend as follows: Price per share after stock dividend=Current Stock Price Per Share(1+25%)=$1251.25=$100 Total Value of Equity After Stock Dividend=Number of Shares×Price Per Share=4,250×$100=$425,000 Therefore, total value of equity after stock dividend remains the same, i.e., $425,000. c. Calculate the number of shares after stock split as follows: Number of Shares After Share Split=Total Number of Existing Shares×54=3,400×54=4,250 Therefore, the total number of shares after stock split is 4,250.

Business

Finance

Suppose that you own 3,400 shares of Nocash Corp. and the company is about to pay a 25% stock dividend. The stock currently sells at $125 per share. a. What will be the number of shares that you hold after the stock dividend is paid? (Do not round intermediate calculations.) Number of shares

Suppose that you own 3,400 shares of Nocash Corp. and the company is about to pay a 25% stock dividend. The stock currently sells at $125 per share. a. What will be the number of shares that you hold after the stock dividend is paid? (Do not round intermediate calculations.) Number of shares

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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