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13 # 8 Stock dividend versus stock split-Firm The board...

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Finance

13 # 8

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Stock dividend versus stock split-Firm The board of Wicker Home Health Care, Inc., is exploring ways to expand the number of shares outstanding in an effort t reduce the market price per share to a level that the firm considers more appealing to investors. The options under consideration are a 30% stock dividend and, alternatively, a 5-for-4 stock split. At the present time, the firms equity account and other per share information are given as follows: a. Show the effect on the equity accounts and per-share data of a 30% stock dividend. b. Show the effect on the equity accounts and per-share data of a 5-for-4 stock split. c. Which option will accomplish Wickers goal of reducing the current stock price while maintaining a stable level of retained earnings? d. What legal constraints might encourage the firm to choose a stock split over a stock dividend? a. Show the effect on the equity accounts and per-share data of a 30% stock dividend

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