Which option will accomplish Wickers goal of reducing the current stock price while maintainig a stable level of retained earnings?
The board of Wicker Home Health Care Inc. is exploring ways to expand the number of shares outstan Show more The board of Wicker Home Health Care Inc. is exploring ways to expand the number of shares outstanding in an effort to reduce the market price per share to a level that the firm considers more appealing to investors. the options under consideration are a 20% stock dividend and alternatively a 5-for-4 stock split. At the present time the firms equity account and other per-share information are as follows: Preferred stock $0 Common Stock (100000 shares at $1 par) 100000 Paid-in capital in excess of par 900000 Retained earnings 700000 Total stockholders equity $1700000 Price per share $30 Earnings per share $3.60 Dividend per share $1.08 a. Show the effect on the equity accounts and per-share data of a 20% stock dividend. b. Show the effect on the equity accounts and per-share data of a 5-for4 stock split. c. Which option will accomplish Wickers goal of reducing the current stock price while maintainig a stable level of retained earnings? d. What legal constraints might encourage the firm to choose a stock split over a stock dividend? **Show work please*** Show less
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