Hayley's Optical has a stockholders' equity account as shown below. The firm's common stock currently sells for $20 per share. (a) What is the maximum dividend per share Hayley's Optical can pay? (Assume capital includes all paid-in capital.)
(b) Recast the partial balance sheet (the stockholders' equity accounts) to show independently
(1) a 2 for 1 stock split of the common stock.
(2) a cash dividend of $1.50 per share.
(3) a stock dividend of 5% on the common stock.
(c) At what price would you expect Hayley's Optical stock to sell after
(1) the stock split?
(2) the stock dividend?

Question

Hayley's Optical has a stockholders' equity account as shown below. The firm's common stock currently sells for $20 per share.  (a) What is the maximum dividend per share Hayley's Optical can pay? (Assume capital includes all paid-in capital.)
(b) Recast the partial balance sheet (the stockholders' equity accounts) to show independently
(1) a 2 for 1 stock split of the common stock.
(2) a cash dividend of $1.50 per share.
(3) a stock dividend of 5% on the common stock.
(c) At what price would you expect Hayley's Optical stock to sell after
(1) the stock split?
(2) the stock dividend?

Quizplus · Accepted Answer

The Answer of Hayley's Optical has a stockholders' equity account as shown below. The firm's common stock currently sells for $20 per share.  (a) What is the maximum dividend per share Hayley's Optical can pay? (Assume capital includes all paid-in capital.)
(b) Recast the partial balance sheet (the stockholders' equity accounts) to show independently
(1) a 2 for 1 stock split of the common stock.
(2) a cash dividend of $1.50 per share.
(3) a stock dividend of 5% on the common stock.
(c) At what price would you expect Hayley's Optical stock to sell after
(1) the stock split?
(2) the stock dividend?

Hayley's Optical Has a Stockholders' Equity Account as Shown Below