The management of Oodles of Noodles Inc. is contemplating a 30% stock dividend. The company currently has cash of $250,000, ?xed assets of $5 million, and debt of $3 million. Its net income for the most recent ?scal year was $800,000. The company’s shares are currently selling for $25 per share, and it has 1 million shares outstandinq. Assume that there are no costs associated with issuing a stock dividend. a. What would be the effect of such a stock dividend on the following? i. Number of shares outstanding ii. Earnings iii. Market value of cash iv. Market value of equity v. Share price vi. Earnings per share (EPS) vii. Price-earnings ratio (P/E) vlil. Shareholders' wealth

b. If the company’s management would like to hold its EPS within the range of 0.7-0.9, should the company go ahead with the stock dividend?

c. If the company's shareholders only care about their wealth and the P/E ratio, should the company go ahead with the stock dividend?

Answer rating: 100% (QA)

a i With a stock dividend the number of outstanding shares increases For a 30 stock dividend on 1 Mi... View the full answer