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5 February, 08:31

NewTech Corporation is offering a 10% stock dividend. The firm currently has 200,000 shares outstanding and after-tax profits of $800,000. The current price of the stock is $48. What will be the firm's earnings per share after the stock dividend?

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  1. 5 February, 08:37
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    Earnings per share after the stock dividend is $3.636.

    Explanation:

    Number of outstanding shares is 200,000.

    After tax profits is $800,000.

    Current stock price=$48.

    Stock dividend=10%

    Number of share outstanding after stock dividend

    =200,000 * (1+10%)

    =220,000

    Earnings per share after stock dividend

    =$800,000/220,000

    =$3.636

    So, the earnings per share after the stock dividend is $3.636.
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