In the spring of? 2016, the CFO of HTPL Distributing Company decided to distribute a stock dividend to its shareholders.? Specifically, the CFO proposed that the company pay 0.04 shares of stock to the holders of each share of common stock such that the holder of? 1,000 shares of stock would receive an additional 40 shares of common stock.
a. If the firm had total net income for the year of $ 12000000 and had 22000000 shares of common stock outstanding before the stock? dividend, what was the? firm's earnings per? share?
b. After paying the stock? dividend, what was the? firm's earnings per? share?
c. If you owned? 1,000 shares of stock before the stock? dividend, how many dollars of earnings did the firm earn from your?1,000-share investment? After the stock dividend was? paid, how many dollars of earnings did the firm earn on your larger share?holdings? What effect would you expect from the payment of the stock dividend on your total investment in the? firm?