### What are the significant differences

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##### Reference no: EM131109229

Milwaukee Tool has the following stockholders' equity account. The firm's common stock currently sells for \$4 per share.

Preferred stock ..............\$ 100,000

Common stock (400,000 shares at \$1 par) .....400,000

Paid-in capital in excess of par .......200,000

Retained earnings ............320,000

Total stockholders' equity .........\$1,020,000

a. Show the effects on the firm of a cash dividend of \$0.01, \$0.05, \$0.10, and \$0.20 per share.

b. Show the effects on the firm of a 1%, 5%, 10%, and 20% stock dividend.

c. Compare the effects in parts a and b. What are the significant differences between the two methods of paying dividends? Personal Finance Problem

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