A common stock is selling for $63 a share. The par value per share is $1and the

Question

A common stock is selling for $63 a share. The par value per share is $1and the total market value of the firm is $94,500. How many shares of stock will be outstanding if the firm does a 3-for-1 stock split?

a. 500 shares

b. 1000 shares

c. 3000 shares

d. 3500 shares

e. 4500 shares

A common stock is selling for $63 a share. The par value per share is $1and the total market value of the firm is $94,500. How many shares of stock will be outstanding if the firm does a 3-for-1 stock split?

a. 500 shares

b. 1000 shares

c. 3000 shares

d. 3500 shares

e. 4500 shares

Explanation / Answer

Number of shares outstanding:

= $94,500/$63

= 1,500 shares

Shares after stock split:

= 1,500 shares×3

= 4,500 shares

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