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How many dollars of earnings did the firm earn from shares

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Stock dividends

In the spring of 2016, the CFO of HTPL Distributing Company decided to distribute a stock dividend to its shareholders. Specifically, the CFO proposed that the company pay 0.045 shares of stock to the holders of each share of common stock such that the holder of 1,000 shares of stock would receive an additional 45 shares of common stock.

Question a. If the firm had total net income for the year of $9,000,000 and had 22,000,000 shares of common stock outstanding before the stock dividend, what was the firm's earnings per share?

Question b. After paying the stock dividend, what was the firm's earnings per share?

Question c. If you owned 1,000 shares of stock before the stock dividend, how many dollars of earnings did the firm earn from your 1,000-share investment? After the stock dividend was? paid, how many dollars of earnings did the firm earn on your larger share? holdings? What effect would you expect from the payment of the stock dividend on your total investment in the? firm?

Reference no: EM132490603

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