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Assume that you owned 800 shares in Cipper Corporation, shown under The Effects of Di
As can be seen, both dividend options are valued at $100 000. Let's look at the effect on total shareholders' equity:
Cipper Corporation Shareholders' Equity Before Dividend Cash Dividend Stock Dividend Common Shares $300 000 $300 000 $300 000 Retained Earnings 120 000 20 000 120 000 Total Equity $420 000 $320 000 $420 000 Book Value per share (Equity / # shares) $4.20 $3.20 $3.36 Assume that you owned 800 shares in Cipper Corporation, shown under The Effects of Dividends on Shareholders' Equity on the content page. Calculate the amount you would receive from a cash dividend and from a stock dividend. Which would you prefer? Fully explain why. |
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