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Answer the following questions: Required: a. For the year ended December 31, 2015, Finco, Inc., reported...

Answer the following questions:
Required:
a. For the year ended December 31, 2015, Finco, Inc., reported earnings per share of $8.60. During 2016, the company had a 3-for-1 stock split. Calculate the 2015 earnings per share that will be reported in Finco's 2016 annual report for comparative purposes. (Round your answer to 2 decimal places.)

b. Additionally, during 2017, Finco had a 4-for-1 stock split. Calculate the 2015 earnings per share that will be reported in Finco's 2017 annual report for comparative purposes. (Round your answer to 2 decimal places.)

c. If Finco had issued a 14% stock dividend in 2016 and did not have a stock split, calculate the 2015 earnings per share that will be reported in Finco's 2016 annual report for comparative purposes. (Round your answer to 2 decimal places.)
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Homework Answers

Answer #1

Answer a

$2.87

Working:-

EPS of 2015 =$8.60

post split 1 share will become 3 share hence EPS of one share before split will have to be devided by 3 to arrive EPS of 2015 for comparative anlysis .

EPS =8.60/3=$2.87

Answer b

$0.717

Working:-

Additionally 1 share of 2016 will become 4 in 2017 and hence 1 share of 2015 will become 1*3*4=12 share.

Hence EPS of 2015 for comparative anlysis will be 8.60/12=$0.717

Answer C

Assume face value of stock is 10 hence dividend 10*14%=$1.4

EPS will be 8.60-1.4=$7.2

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