Wilson Pharmaceuticals’ stock has done very well in the market during the last t

Question

Wilson Pharmaceuticals’ stock has done very well in the market during the last three years. It has risen from $25 to $50 per share. The firm’s current statement of stockholders’ equity is as follows:

How many shares would be outstanding after a two-for-one stock split? (Do not round intermediate calculations. Input your answer in millions (e.g., $1.23 million should be entered as "1.23").)

What would be its par value? (Do not round intermediate calculations and round your answer to 2 decimal places.)

How many shares would be outstanding after a three-for-one stock split? (Do not round intermediate calculations. Input your answer in millions (e.g., $1.23 million should be entered as "1.23").)

What would be its par value? (Do not round intermediate calculations and round your answer to 2 decimal places.)

Assume that Wilson earned $18 million. What would its earnings per share be before and after the two-for-one stock split? After the three-for-one stock split? (Do not round intermediate calculations and round your answers to 2 decimal places.)

What would be the price per share after the two-for-one stock split? After the three-for-one stock split? (Assume that the price-earnings ratio of 11.11 stays the same.) (Do not round intermediate calculations and round your answers to 2 decimal places.)

Wilson Pharmaceuticals’ stock has done very well in the market during the last three years. It has risen from $25 to $50 per share. The firm’s current statement of stockholders’ equity is as follows:

Explanation / Answer

a-1 Shares Outstanding after 2 for 1 split would be

Intial Shares = 4 Million

due to 2: 1stock split additonal 8 Mn shares would be issued

therefore the number of shares issued would be = 4 Mn + 4 Mn = 8 Mn

2 a-2 Par value of the stock would be 10/2 =5

3 Number of shares for 3 for 1 stock split would be

4* 3 =12 Mn

Par value would be 10/3 =3.33

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