An investor currently holds 400 shares of Apex Corporation common stock in a retail cash account. The corporation declares and distributes a 5% stock dividend. Six months later, Apex Corporation executes a 3-for-2 forward stock split. Following the split, the board of directors approves a quarterly cash dividend of $0.25 per share. What is the total dollar amount of the quarterly cash dividend that the investor will receive?
Answer: 157.5 USD
Answer
The total dollar amount of the quarterly cash dividend received by the investor is $157.50.
To determine the total cash dividend, the share count must be adjusted chronologically for each corporate action. First, the 5% stock dividend increases the original 400 shares to 420 shares (400 * 1.05). Second, the 3-for-2 forward stock split increases the share count from 420 to 630 shares (420 * 1.5). Finally, multiplying the 630 post-split shares by the 157.50.
Step-by-Step Solution
Key Concept
Adjusting share position quantities for sequential corporate actions (stock dividends and stock splits) to calculate total cash dividend payments.