Simmons Mineral Operations, Inc., (SMO) currently has 465,000 shares of stock ou

Question

Simmons Mineral Operations, Inc., (SMO) currently has 465,000 shares of stock outstanding that sell for $60 per share. Assuming no market imperfections or tax effects exist, what will the share price be after:

SMO has a five-for-three stock split? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

SMO has a 10 percent stock dividend? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

SMO has a 50.5 percent stock dividend? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

SMO has a four-for-seven reverse stock split? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Determine the new number of shares outstanding in parts (a) through (d). (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.)

SMO has a five-for-three stock split? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Explanation / Answer

a.

New share price = (465,000 shares * $60) * 5/3

= $46,500,000 /465,000 shares

= $100 per share.

Therefore, the new share price is $100

b.

New share price = 465,000 shares + (465,000 shares *10%)

= 511,500 shares

= $27,900,000 /511,500 shares

= $54.55 per share

Therefore, the new share price is $54.55

c.

New share price = 465,000 shares + (465,000 shares *50.5%)

= 699,825 shares

= $27,900,000 / 699,825 shares

= $39.87 per share

Therefore, the new share price is $39.87

d.

New share price = (465,000 shares * $60) * 7/4

= $48,825,000 /465,000 shares

= $105 per share.

Therefore, the new share price is $105.

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