Wilson Pharmaceuticals’ stock has done very well in the market during the last three years. It has risen from $55 to $80 per share. The firm’s current statement of stockholders’ equity is as follows: Common stock (5 million shares issued at par value of $10 per share) $ 50,000,000 Paid-in capital in excess of par 13,000,000 Retained earnings 57,000,000 Net worth $ 120,000,000
Wilson Pharmaceuticals’ stock has done very well in the market during the last three years. It has risen from $55 to $80 per share. The firm’s current statement of
| Common stock (5 million shares issued at par value of $10 per share) | $ | 50,000,000 |
| Paid-in capital in excess of par | 13,000,000 | |
| 57,000,000 | ||
| Net worth | $ | 120,000,000 |
a-1. How many shares would be outstanding after a two-for-one stock split? (Do not round intermediate calculations. Input your answer in millions (e.g., $1.23 million should be entered as "1.23").)
a-2. What would be its par value? (Do not round intermediate calculations and round your answer to 2 decimal places.)
b-1. How many shares would be outstanding after a three-for-one stock split? (Do not round intermediate calculations. Input your answer in millions (e.g., $1.23 million should be entered as "1.23").)
b-2 What would be its par value? (Do not round intermediate calculations and round your answer to 2 decimal places.)
c. Assume that Wilson earned $11 million. What would its earnings per share be before and after the two-for-one stock split? After the three-for-one stock split? (Do not round intermediate calculations and round your answers to 2 decimal places.)
d. What would be the price per share after the two-for-one stock split? After the three-for-one stock split? (Assume that the price-earnings ratio of 36.36 stays the same.)
Answer C, B-2, and D
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