Question

NewTech Corporation is offering a 10% stock dividend. The firm currently has 200,000 shares outstanding and after-tax profits of $800,000. The current price of the stock is $48. What will be the firm's earnings per share after the stock dividend?

Answer 1

Answer:

Earnings per share after the stock dividend is $3.636.

Explanation:

Number of outstanding shares is 200,000.

After tax profits is $800,000.

Current stock price=$48.

Stock dividend=10%

Number of share outstanding after stock dividend

=200,000*(1+10%)

=220,000

Earnings per share after stock dividend

=$800,000/220,000

=$3.636

So, the earnings per share after the stock dividend is $3.636.