Question

Samsonite has declared a 90% stock dividend. At the time of the declaration, Samsonite's stock was selling for $250 per share. If Samsonite's total market value remains unchanged by the stock dividend, then what will the new stock price be once the dividend has been enacted?

Answer 1

Answer:

$131.58

Explanation:

The computation of the new stock price is shown below:

= Selling price of stock per share ÷ current number of shares

= $250 ÷ 1.90

= $131.58

Since the 90% dividend is declared. It means for each share 90% dividend is declared so after stock dividend, the number of shares would be

= 1 + 90%

= 1 + 0.9

= 1.9

We simply divide the selling price by the current number of shares