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Free_Kalibri [48]
3 years ago
9

A company that has been growing rapidly announces that it is splitting its stock 3:2 and increasing its cash dividend by 20%. Pr

ior to the announcement, the stock was trading at $60 and the dividend yield was 10%. What will be the next dividend paid per share
Business
1 answer:
Gnesinka [82]3 years ago
6 0

Answer:

$4.8 per share annually

$1.20 per share quarterly

Explanation:

Stock Split is the issuance of additional share with proportion to the existing share holding. It increase the numbers of outstanding share of the company. Ir results in decrease in the market price of the share but the total market capitalization remains the same.

Dividend yield is the rate of dividend payment as per the market value of that share.

As per given data

Stock price = $60

Dividend yield = Dividend / Market Price

10% = Dividend / $60

Dividend = $60 x 10% = 46

On stock split, for every 2 shares, there will now be 3 shares. Shares are increase by 1.5 times (3/2).

After Stock Split

Share price = $60 / 1.5 = $40

Annual dividend amount per share before the increase

Dividend = $6.00 / 1.5 = $4.00 per share

Annual dividend amount per share before the increased by 20%

Dividend = $4 x 120% = $4.80 per share

Quarterly dividend payment = $4.80 / 4 = $1.20 per share

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<h3>Hello there!</h3>

Your question asks what comes after the period of recession in the business cycle.

<h3>Answer: D). Recovery</h3>

The reason why answer choice "D). Recovery" is correct because this comes after the period of recession in the business cycle.

Recession is like a "slow down" in the activity of a business. Which means that they aren't receiving any income, GDP, investments, and etc. This would cause a business to decrease while a lot of expenses that the business is getting are increasing. By expensive, I mean the cost to keep the business running and things of that sort.

Businesses go through a time of recession; therefore, they need to "recover" from that. And that's why recovery is the next stage. A business must recover from the "recession" period if they want to keep the business up and running. If the business doesn't recover, then the business will fail.

Once the business can recover from the recession period, then the business can succeed in their plans and execute them, while seeing the profits that they expected to make.

<h3>I hope this helps!</h3><h3>Best regards, MasterInvestor</h3>
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Answer:

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