Bermuda Triangle Corporation (BTC) currently has 540,000 shares of stock outstan

Question

Bermuda Triangle Corporation (BTC) currently has 540,000 shares of stock outstanding that sell for $87 per share. Assuming no market imperfections or tax effects exist.

Determine the share price and new number of shares outstanding if: (Do not round intermediate calculations. Round your price per share answers to 2 decimal places (e.g., 32.16) and shares outstanding to the nearest whole number (e.g., 32).):

Bermuda Triangle Corporation (BTC) currently has 540,000 shares of stock outstanding that sell for $87 per share. Assuming no market imperfections or tax effects exist.

Explanation / Answer

(a) BTC has a five-for-three stock split.   Price per share $    87 No change in the price per share   Shares outstanding    1440000 Total 900,000 shares issued additionally plus 540,000 shares originally outstanding (b) BTC has a 14 percent stock dividend.   Price per share $    99.18 Increase by 14% owing to stock dividend declared   Shares outstanding    615600 540,000 shares increased by 14% stock dividend declaration (c) BTC has a 44.5 percent stock dividend.   Price per share $    121.38 Increase by 44.5% owing to stock dividend declared   Shares outstanding    780300 540,000 shares increased by 44.5% stock dividend declaration (d) BTC has a four-for-seven reverse stock split.   Price per share $    87 No change in stock price per share   Shares outstanding    231429 No. of shares reduced from 540,000 by (540,000 X 4/7)

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