If a customer owns 1,000 shares at $40 each and receives a 10% stock dividend, what is the adjusted cost basis per share?

To determine the adjusted cost basis per share after a 10% stock dividend, first, we need to understand how stock dividends affect the number of shares owned and the cost basis.

In this scenario, the customer initially owns 1,000 shares, each valued at $40. The total investment before the dividend is therefore $40,000 (1,000 shares * $40 per share). A 10% stock dividend means that for every 100 shares owned, the investor receives an additional 10 shares.

Calculating the new total number of shares after the dividend, we have:

• Original shares: 1,000

• Additional shares from the dividend: 1,000 * 10% = 100

This brings the total number of shares to 1,100 (1,000 original + 100 additional).

Next, to find the adjusted cost basis per share, we take the total cost of the investment and divide it by the new total number of shares:

Adjusted cost basis per share = Total investment / Total shares after dividend

Adjusted cost basis per share = $40,000 / 1,100 = $36.36

Thus, the adjusted cost basis per share after a 10% stock