Question

CBA Inc has 400,000 shares outstanding with a $5 par value. The shares were issued for $12. The stock is currently selling for $34. CBA has $5,000,000 in retained earnings and has declared a stock dividend that will increase the number of outstanding shares by 6%. How many shares will be outstanding after the stock dividend?

Answer 1

Answer:

The number of shares that will be outstanding after the stock dividend is 424,000 shares.

Explanation:

This can be calculated as follows:

Number of shares outstanding before the stock dividend = 400,000

Percentage increase in the number of outstanding shares after stock dividend = 6%

Number of increase in the number of outstanding shares after stock dividend = Number of shares outstanding before the stock dividend * Percentage increase in the number of outstanding shares after stock dividend = 400,000 * 6% = 24,000

Therefore, we have:

Number of shares outstanding after the stock dividend = Number of shares outstanding before the stock dividend + Number of increase in the number of outstanding shares after stock dividend = 400,000 + 24,000 = 424,000

Therefore, the number of shares that will be outstanding after the stock dividend is 424,000 shares.