Use the information for the question(s)below.
Luther Industries currently has 5 million shares outstanding and its stock is currently trading at $40 per share.
-Assuming Luther issues a 25% stock dividend,then Luther's new share price is closest to:
A)$24.00.
B)$30.00.
C)$16.00.
D)$32.00.

Question

Quizplus · Accepted Answer

A 25% stock dividend increases the number of shares by 25%, resulting in 6.25 million shares. The total market value remains the same, so the new share price is $40 * (5/6.25) = $32.00.

Use the Information for the Question(s)below