How much does the firm currently earn per share

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Reference no: EM1310269

Sarah Warren currently holds 400s shares of Nutri-Foods. The firm has 40,000 shares outstanding. The firm most recently had earnings available for common stockholders of $80,000, and its stock has been selling for $22 per share. The firm intends to retain its earnings and pay a 10% stock dividend.

a)How much does the firm currently earn per share?

b)What proportion of the firm does Warren currently own?

c)What proportion of the firm will Warren own after the stock dividend?

d)At what market price would you expect the stock to see after the stock dividend? Explain your answer

e)Discuss what effect, if any, the payment of stock dividends will have on Warren's share of the ownership and earnings of Nutri-Foods.

Reference no: EM1310269

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