Wilson Pharmaceuticals’ stock
Question
21)Wilson Pharmaceuticals’ stock has done very well in the market during the last three years. It has
risen from $75 to $100 per share. The firm’s current statement of stockholders’ equity is as follows:
| Common stock (5 million shares issued at par value of $10 per share) | $ | 50,000,000 |
| Paid-in capital in excess of par | 11,000,000 | |
| Retained earnings | 44,000,000 | |
| Net worth | $ | 105,000,000 |
| a-1. | How many shares would be outstanding after a two-for-one stock split? (Do not round intermediate calculations. Input your answer in millions (e.g., $1.23 million should be entered as “1.23”).) |
| Number of shares | million |
| a-2. | What would be its par value? (Do not round intermediate calculations and round your answer to 2 decimal places.) |
| Par value | $ |
| b-1. | How many shares would be outstanding after a three-for-one stock split? (Do not round intermediate calculations. Input your answer in millions (e.g., $1.23 million should be entered as “1.23”).) |
| Number of shares | million |
| b-2 | What would be its par value? (Do not round intermediate calculations and round your answer to 2 decimal places.) |
| Par value | $ |
| c. | Assume that Wilson earned $15 million. What would its earnings per share be before and after the two-for-one stock split? After the three-for-one stock split? (Do not round intermediate calculations and round your answers to 2 decimal places.) |
| EPS before | $ |
| EPS after 2-for-1 split | $ |
| EPS after 3-for-1 split | $ |
| d. | What would be the price per share after the two-for-one stock split? After the three-for-one stock split? (Assume that the price-earnings ratio of 33.33 stays the same.) (Do not round intermediate calculations and round your answers to 2 decimal places.) |
| Price after 2-for-1 split | $ |
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