Runner Inc. is considering one of the three following courses of action: (1) paying a $0.6 cash dividend, (2) distributing a 4% stock dividend, or (3) effecting a 2-for-1 stock split. The current share price is $14 per share. Help Runner make its decision by completing the following chart (treat each possibility independently): Total assets Total liabilities Shareholders' equity Common shares Retained earnings Total shareholders' equity Total liabilities and shareholders' equity Number of common shares Before Action $1,261,000 $ $231,000 $ 560,000 470,000 1,030,000 $1,261,000 100,000 $ After Cash Dividend $ After Stock Dividend After Stock Split

Runner Inc. is considering one of the three following courses of action: (1) paying a $0.6 cash dividend, (2) distributing a 4% stock dividend, or (3) effecting a 2-for-1 stock split. The current share price is $14 per share. Help Runner make its decision by completing the following chart (treat each possibility independently): Total assets Total liabilities Shareholders' equity Common shares Retained earnings Total shareholders' equity Total liabilities and shareholders' equity Number of common shares Before Action $1,261,000 $ $231,000 $ 560,000 470,000 1,030,000 $1,261,000 100,000 $ After Cash Dividend $ After Stock Dividend After Stock Split

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 12P

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