Roll Corporation (RC) currently has 515,000 shares of stock outstanding that sel

Question

Roll Corporation (RC) currently has 515,000 shares of stock outstanding that sell for $40 per share. Assuming no market imperfections or tax effects exist, what will the share price be after:    a. RC has a five-for-three stock split? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      New share price $       b. RC has a 15 percent stock dividend? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      New share price $       c. RC has a 44.5 percent stock dividend? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      New share price $       d. RC has a 2-for-7 reverse stock split? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      New share price $       e. Determine the new number of shares outstanding in parts (a) through (d). (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)    a. New shares outstanding    b. New shares outstanding    c. New shares outstanding    d. New shares outstanding    Roll Corporation (RC) currently has 515,000 shares of stock outstanding that sell for $40 per share. Assuming no market imperfections or tax effects exist, what will the share price be after:    a. RC has a five-for-three stock split? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      New share price $       b. RC has a 15 percent stock dividend? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      New share price $       c. RC has a 44.5 percent stock dividend? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      New share price $       d. RC has a 2-for-7 reverse stock split? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      New share price $       e. Determine the new number of shares outstanding in parts (a) through (d). (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)    a. New shares outstanding    b. New shares outstanding    c. New shares outstanding    d. New shares outstanding   

Explanation / Answer

a) It means for every 3 stock the shareholders hold, they will get 5 shares.

So, new share price = 40*3/5 = 24.

B) New share price = Current share price * (1-stock dividend)

= 40*(1-0.15) = 34

C) New share price = 40*(1-0.445) = 22.2

D) New share price = 40*7/2 = 140

E) New shares outstanding in A = 515000*5/3 = 858,333

New shares outstanding in B = 515000*(1+0.15) = 592,250

New shares outstanding in C = 515000*(1+0.445) = 744,175

New shares outstanding in D = 515000*2/7 = 147,143

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