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. Assume 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 answers to the nearest whole number, e.g., 32.)

a. BTC has a five-for-three stock split.

b. BTC has a 14 percent stock dividend.

c. BTC has a 44.5 percent stock dividend.

d. BTC has a four-for-seven reverse stock split.

Price per share $ Shares outstanding

Explanation / Answer

a. BTC has a five-for-three stock split.

When there is a stock split there is absolutely no economic activity involved, except for change in market price and Number of shares oustanding. Due to split Number of shares shall increase and share price shall decrease.

Price = 87 * 3/5 and Number = 540000 * 5/3

b. BTC has a 14 percent stock dividend.

Price after stock dividend = 87 / 1.14 and Shares outstanding = 540000 * 1.14

c. BTC has a 44.5 percent stock dividend.

Price after stock dividend = 87 / 1.445 and Shares outstanding = 540000 * 1.445

d. BTC has a four-for-seven reverse stock split.

Price per share 52.2 Shares outstanding 900000

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