3. Stock dividends and stock splits Companies sometimes consider stock splits to

Question

3. Stock dividends and stock splits Companies sometimes consider stock splits to bring down the price so that the stock attracts more purchases. Mainway Toy Company currently has 30,000 shares of common stock outstanding. Its management believes that its current stock price of $90 per share is too high. The company is planning to conduct stock splits in the ratio of 3 for 1 as described in the animation. tificate of Sto $12.1 If Mainway Toy Company declares a 3-for-1 stock split, what will be the price of the company's stock after the split, that the total value of the firm's stock remains the same after the split, will be Scorecard Athletics Corp. is one of Mainway's leading competitors. Scorecard's market intelligence research team shares Mainway's plans of announcing a stock split, influencing the distribution policy makers. Consequently, executives at Scorecard decide to offer stock dividends to its shareholders If the firm pays a 5% stock dividend, what will be the total number of shares outstanding after the stock dividend? O 3,360,000 shares O 3,864,000 shares O 2,856,000 shares O 3,192,000 shares Scorecard currently has 3,200,000 shares of common stock

Explanation / Answer

No of stocks after split = 30000 * 3 = 90000

let price of stock be x

x * 90000 = 90 * 30000

x = $30

Stock dividend will increase the number of share by 5% = 3,200,000 * 1.05 = 3,360,000 shares

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.