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What would be the effect of such a stock dividend

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Company WNE is contemplating a 30% stock dividend. The company currently has cash of $250,000, fixed assets of $5 million, and debt of $3 million. Its net income for the most recent fiscal year was $800,000. The company's shares are currently selling for $25 per share, and it has 1 million shares outstanding.

Assume that there are no costs associated with issuing a stock dividend.

a. What would be the effect of such a stock dividend on the following:

  1. Number of shares outstanding
  2. Earnings
  3. Market value of cash
  4. Market value of equity
  5. Share price
  6. Earnings per share (EPS)
  7. Price-earnings ratio (P/E)
  8. Shareholders' wealth 

Reference no: EM131840316

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