Question: (Stock dividends) The General Meeting of Remy Cointreau SA, listed on Euronext Paris, held in July 2015, set the overall dividend at €1.53 per share. The Meeting decided to grant every shareholder payment of the dividend in shares for the entire dividend paid. The issue price of the new share will be €58.20. Dividend payment in shares will be based on share records of 4 August 2015.
a. If the firm had total net income for the year of €11,521,235.81 and had 4,710,253 shares of common stock outstanding before the cash or stock dividend, what are firm earnings per share?
b. After paying the stock dividend, what is the firm's earnings per share? How do you explain it?
c. If you owned 1,000 shares of stock before the stock dividend, how many euros of earnings did the firm earn from your 1,000 share investment? After the stock dividend is paid, how many euros 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?