Question

An individual shareholder owns 3,000 shares of Baxter Corporation common stock with a basis of $10 per share. She receives a nontaxable 5% stock dividend. The basis per share of the common stock after the stock dividend is

A) $9.00
B) $9.50.
C) $9.52.
D) $10.00

Answer 1

Option "C" is the correct answer to the following statement.

Step-by-step explanation:

Given:

Total number of shares = 3,000

Stock dividend rate = 5%

Total Amount of shares = 3,000 x $10

= 30,000

Number of stock Dividend = 30,00 x 5%

= 150

Total Number of stock after stock dividend = 3,000 + 150

= 3,150

Per share of common stock after stock dividend = Total stock dividend amount / Number of stock after stock dividend

= 30,000 / 3,150

= 9.523

9.52 (approx)