MNO declared a stock dividend when it had 40,000 shares outstanding.After issuing the dividend, 7,200 additional shares and 4,000 fractional share rights were outstanding.If it required five fractional share rights to acquire a new share, this dividend must have been a:

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The company had 40,000 shares and issued 7,200 additional shares, which is an increase of 18%. However, there were also 4,000 fractional share rights issued, and it takes 5 of these rights to make one share, resulting in 800 additional shares (4,000 / 5). Adding these 800 shares to the 7,200 gives a total of 8,000 new shares, which is 20% of the original 40,000 shares, indicating a 20 percent stock dividend.

MNO Declared a Stock Dividend When It Had 40,000 Shares