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    Menomonie Publishing Calculating stock dividend, stock split and reverse stock split

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    Menomonie Publishing stock currently sells for $40 per share. The company has 1,200,000 shares outstanding. What would be the effect on the number of shares outstanding and on the stock price of the following:

    15% Stock Dividend

    4-for-3 Stock Split

    Reverse 3-for-1 Stock Split

    Last year both Hudson Homes and Baldwin Construction earned $1 million in net income. Both companies have assets of $10 million. Hudson generated a return on equity of 11.1%, whereas Baldwin produced a return on equity of 20.0%. What can explain the differences in return on equity between the two companies?

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    Solution Summary

    In a concise Excel presentation, the answers to the questions are presented.