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What would be the new market price of the stock

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Question - Smith Machinery. Inc., currently has 3,500,000 common stock shares issued and outstanding, with a current market price of $87.60. The Board of Directors are considering several options to award a dividend to the current shareholders, including a cash dividend, a stock dividend, and possibly a stock split. Consider this information and determine the following, considering each situation independent of the others:

1. If the Board authorizes a stock dividend of 16%, what would be the new market price of the stock?

2. If the Board authorizes a cash dividend of $0.85 per share, what would be the cost to the ?rm?

3. If the Board authorized a stock split of 1.5 to 1, what would be the market price of the stock?

Reference no: EM133185502

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