The company declares a four-for-one stock split. How many shares are outstanding

Question

The company declares a four-for-one stock split. How many shares are outstanding now? (Do not round intermediate calculations.)

The company declares a four-for-one stock split. What is the new par value per share? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

The company declares a one-for-five reverse stock split. How many shares are outstanding now? (Do not round intermediate calculations.)

The company declares a one-for-five reverse stock split. What is the new par value per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Explanation / Answer

Stock Split : It means the split the par value of thecommon stock , so in this cash the nunmber of shares will increase but total par value of the shares are same. Reverse stock split : it means the combine the par value of the common shares in the described ratio. in this case the total number of shares are reduced but par value of the common shares are the same. Answer = a-1) Current outstanding shares = 32,500 / $ .40 =                    81,250 Shares Declare four -For-one stock split = $ .40 / 4 = $ .10 par value of the shares Shares Outstanding = $ 32,500 / $ . 10 =                3,25,000 Shares Answer = a-2) = New Par Value of the stock = $ .10 Per share Answer = b-1) Reverse Stock Split = $ .10 X 5 = $ .50 Per shares Shares Outstanding = $ 32,500 / $ .50 =                    65,000 Shares Answer = b-2) = New Par Value of the stock = $ .50 Per share

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