1. Stock Splits and Stock Dividends Roll Corporation currently has 220,000 shares of stock outstanding that sell for $82 per share. Assuming no market imperfections or tax effects exist, what will the share price be after:
a. RC has a five-for-two stock split?
b. RC has a 18 percent stock dividend?
c. RC has a 43 percent stock dividend?
d. RC has a three-for-seven reverse stock split?
e. Determine the new number of shares outstanding in parts (a) through (d)
2. Stock Dividends The company with the common equity accounts shown here has declared a 12 percent stock dividend at a time when the market value of its stock is $44 per share. What effects on the equity accounts will the distribution of the stock dividend have?
Common stock ($1 par value) $165,000
Capital Surplus $1,512,000
Retained earnings $2,865,000
Total owners equity $4,542,000
Suppose the company instead decides on a five-for-one stock split. The firms 80-cent per share cash dividend on the new (post-split) shares represents an increase of 10% over last years dividend on the pre-split stock. What effect does this have on the equity accounts? What was last years dividend per share?
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