Answer the following two questions: Q\#1: Sarah Corporation, which manufactures biotech drugs, has been experiencing...
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Answer the following two questions: Q\#1: Sarah Corporation, which manufactures biotech drugs, has been experiencing a tremendous growth in the price of its common stock. The stock price increased from $4.50 on January 1,201 to $18.00 per share on December 31,205. Its current net worth statement is as follows: a) What changes would occur in the above statement of net worth after a 2 for 1 stock split? b) Earnings for 205 were $1,575,000, what would EPS be before and after the stock split? Q\#2: XYZ Corporation is evaluating an extra dividend versus a share repurchase. In either case, $14,500 would be spent. Current earnings are $1.65 per share, and the stock currently sells for $58 per share. There are 2,000 shares outstanding. a) Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth per share. b) What will the company's EPS and P/E ratio be under the two different scenarios
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