Concentric price-earnings multiple remains after dividend

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Reference no: EM131051215

Concentric Corporation has 10 million shares of stock outstanding. Concentric's after tax profits are$140 million and the corporation's stock is selling at a price-earning multiple of 18, for a stock price of$252 per share. Concentric's management issues a 40% stock dividend. What is the effect on an investor who owns 100 shares of Concentric before the dividend if Concentric's price-earnings multiple remains the same after the dividend is paid?

a. The investor will own 100 shares worth $35,280

b. The investor will own 100 shares worth $25,200.

c. The investor will own 140 shares worth $25,200

d. The investor will own 140 shares worth $35,280

Reference no: EM131051215

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