Compute post-stock dividend price of complex computers stock

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Reference no: EM13927266

The board of directors of Complex Computers has decided to declare a 20 per- cent stock dividend. The company's common stockholders' equity is as follows:

Pre-Stock Dividend Common Stockholders' Equity

Common stock ($1 par, 100,000 shares)	$ 100,000
Contributed capital in excess of par	900,000
Retained earnings	5,000,000
Total common stockholders' equity	$6,000,000

The common stock of Complex Computers is currently trading at $80 a share. The company is growing rapidly and has never paid a cash dividend.

a. Show the company's common stockholders' equity after the stock dividend.

b. Calculate the post-stock dividend price of Complex Computers stock, assuming no other changes occur.

Reference no: EM13927266

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