Homework: Chapter 13 Graded Homework. Score: 0.67 of 1 pt & Problem 13.LO4.27 (s
ID: 2430084 • Letter: H
Question
Homework: Chapter 13 Graded Homework. Score: 0.67 of 1 pt & Problem 13.LO4.27 (similar to) Save 4 of 5 (4 complete) Hw Score: 43.33%, 2.17 of 5 pts E Question Heip Deiow. Cummins Inc. Selected Financial Information Stock Price EPS Dividends per share Payout Ratio Shares Outstanding $90 $7.79 $1.48 22.35% 150M a. Cummins is considenng a stock dividend of 5%. What will shares outstanding be ater the dividend? b Cummins is considering a stock di dend of 5% What will the stock price beafer the divider d Assuming no other changes ? C. Cummins is considenng a stock dividend of 5%. What will earnings-per-share be after the dividend? Tne snares or 5%. vvnat wm snares outstanong De arter tne arvaena, r cummins is conseering a stock avaena oros, outstanding after the dividend will be 157.50 millon. (Round to two decimal places.) b. Cummins is considering a stock dividend of 5%. What will the stock price be after the dividend (Assuming no other dividend of 5%, the stock price after the dividend wil be S 8d71 (Round to two decimal places) the dividend (Assuming no other changes)? if Cummins is considering a stock s is considering a stock dividend of 5%, the EPS will stock dividend of 5%, what wil earnings per-share be after the di dend? if Cu m n c. Cummins is considering a be (Round to two decimal places.)Explanation / Answer
Solution 13.LO4.27:
a. Nos of outstanding share after stock dividendd = 150 Million + 150 million * 5% = $157.50 million
b. Current market cap of company = Outstanding shares * Market price per share = 150 Million * $90
= $13,500 million
By stock dividend market cap of company will remain the same, therefore
stock price after dividend = Market cap / nos of outstanding share = $13,500 milion / 157.50 = $85.71 per share
c. Total earnings = EPS * shares outstanding = $7.79 * 150 million = $1,168.50 million
Earning per share after stock dividend = $1,168.50 / 157.50 = $7.42 per share
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