Gino\'s Restaurant Corporation wholesales ovens and ranges to restaurants throug

Question

Gino's Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Midwest. Gino's Restaurant Corporation, which had 100,000 shares of common stock outstanding, declared a 5-for-1 stock split (4 additional shares for each share issued). a. What will be the number of shares outstanding after the split? _________________ shares b. If the common stock had a market price of $200 per share before the stock split, what would be an approximate market price per share after the split? $ _________________ per share

Explanation / Answer

The market price of total shares outstanding was $12,000,000 (40,000 x $300). That total amount will remain approximately the same, now you just have to divide by the new total shares outstanding. $12,000,000 / 160,000 = $75 per share

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