Concentric Corporation Has 10 Million Shares of Stock Outstanding

question 162

Multiple Choice

Concentric Corporation has 10 million shares of stock outstanding.Concentric's after-tax profits are $140 million and the corporation's stock is selling at a price-earnings multiple of 18,for a stock price of $252 per share.Concentric's management issues a 40% stock dividend.What is the effect on an investor who owns 100 shares of Concentric before the dividend if Concentric's price-earnings multiple remains the same after the dividend is paid?

• A) The investor will own 140 shares worth $25,200.
• B) The investor will own 140 shares worth $35,280.
• C) The investor will own 100 shares worth $25,200.
• D) The investor will own 100 shares worth $35,280.

---

Definitions:

Ectotherms

Organisms that regulate their body temperature through external means, relying on environmental heat sources.

Endotherms

Organisms that maintain a constant body temperature through metabolic processes, despite external environmental changes.

Homeostatic Mechanisms

The regulatory mechanisms that maintain homeostasis.

Energy Expenditure

The total amount of energy used by an organism for basic bodily functions and physical activity.