Jackson Corporation paid a dividend of $1.50 per share.It forecasted a $2.50 per share in earnings and had a stock price of $45.Determine the stock price if Cormex declared a 15% stock dividend.

Question

Quizplus · Accepted Answer

A 15% stock dividend means that for every 100 shares owned, a shareholder receives an additional 15 shares. This does not change the total value of the company but distributes it over more shares, reducing the price per share. The new share count is 115% of the original. To find the new price, divide the original price by 1.15. $45 / 1.15 = $39.13.

Jackson Corporation Paid a Dividend of $1