Calculate price after the split if the p-e increases

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Reference no: EM131962885

Jones Company stock trades at $60 a share. The company is contemplating a 3-for-2 stock split. Currently, the company has EPS of 63.00, Dividend of $0.75, and 25 million shares of stock outstanding.

A. Calculate price after the split if the P/E increases by 1 point (for example, if P/E was 10 prior to split, it increases to 11 after the split)

B. Why might a stock split cause the P/E to increase?

Reference no: EM131962885

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