Wilson Pharmaceuticals\' stock has done very well in the market during the last

Question

Wilson Pharmaceuticals' stock has done very well in the market during the last three years. It has risen from $25 to S50 per share. The firm's current statement of stockholders' equity is as follows: Paid-in capital in excess of par Retained earnings Common stock (3 million shares issued at par value of $10 per share) 30,000,000 15,000,000 45,000,000 Net worth $ 90,000,000 a-1. 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"). Number of shares million a-2. What would be its par value? (Do not round intermediate calculations and round your answer to 2 decimal places.) Par value

Explanation / Answer

A1 = 3million *2/1= 6 million shares

A2 = 10 divide by 2 = 5 per share

B1 = 3 million *3/1 = 9 million

B2 = 10 divide by 3 = 3.33

C = EPS before = 11 million divide by 3 million = 3.67 per share

EPS after 2 for 1 split = 11/6 = 1.83 per share

EPS after 3 for 1 split = 11/9 = 1.22 per share

D

MARKET VALUE

After 2 for 1 split 50 divide by 2 equals 25

After 3 for 1 split 50 divide by 3 equals 16.67

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