Question

Wilson Pharmaceuticals’ stock has done very well in the market during the last three years. It...

Wilson Pharmaceuticals’ stock has done very well in the market during the last three years. It has risen from $35 to $60 per share. The firm’s current statement of stockholders’ equity is as follows:

   

  Common stock (3 million shares issued at par value of $10 per share) $ 30,000,000
  Paid-in capital in excess of par 12,000,000
  Retained earnings 48,000,000
       Net worth $ 90,000,000

a-1. How many shares would be outstanding after a two-for-one stock split? (Do not round intermediate calculations. Input your answer in millions (e.g., $1.23 million should be entered as "1.23").)
  

Number of shares    million

a-2. What would be its par value? (Do not round intermediate calculations and round your answer to 2 decimal places.)
  

Par value   


b-1. How many shares would be outstanding after a three-for-one stock split? (Do not round intermediate calculations. Input your answer in millions (e.g., $1.23 million should be entered as "1.23").)
  

Number of shares    million

b-2 What would be its par value? (Do not round intermediate calculations and round your answer to 2 decimal places.)
  

Par value   


c. Assume that Wilson earned $12 million. What would its earnings per share be before and after the two-for-one stock split? After the three-for-one stock split? (Do not round intermediate calculations and round your answers to 2 decimal places.)

EPS before   
EPS after 2-for-1 split
EPS after 3-for-1 split

d. What would be the price per share after the two-for-one stock split? After the three-for-one stock split? (Assume that the price-earnings ratio of 15.00 stays the same.) (Do not round intermediate calculations and round your answers to 2 decimal places.)
  

Price after 2-for-1 split
Price after 3-for-1 split

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