. ((a) Progressive Services, Inc. has just declared a 7 for 3 stock split. The company's pre-split common stockholders' equity was as follows:

Common stock($1.25 par, 2,000,000 shares)	$ 2,500,000
Contributed capital in excess of par	$ 17,500,000
Retained earnings	182,100,000
Total common stockholders' equity	$202,100,000

If the pre-split price of common stock was $40, what will be the amount of retained earnings after the split? (3 points).

(b) ABC Inc. has the following current equity accounts on its balance sheet:

Common stock ($2.50 par, 500,000 shares)	$ 1,250,000
Contributed capital in excess of par	$10,000,000
Retained earnings	$25,750,000
Total	$37,000,000

If ABC earned $5.00 per share this year, what is the maximum dividend per share that ABC may pay if the state capital impairment provisions are limited to the par value and 50% of the contributed capital in excess of par accounts? (3 points).

What is a Dividend Reinvestment Program (DRIP) as it applies to stocks? (2 points).

1. Suppose you own 8,000 shares of Upward Mobility Inc. and the firm has a DRIP program. Upward Mobility pays dividends at the rate of $3.50 per share per year and has a current price of $60 per share.

Required:

1. How many additional shares of stock can you receive if you elect to receive dividends via the DRIP option? (3 points).

1. What advantage over purchasing the stock on the open market does a DRIP plan offer? (3 points).