If Freya declares a four-for-one stock split, how many shares are outstanding no
ID: 2750655 • Letter: I
Question
If Freya declares a four-for-one stock split, how many shares are outstanding now? (Do not round intermediate calculations.)
What is the new par value per share? (Do not round intermediate calculations. Round your answer to 3 decimal places, e.g., 32.161.)
If Freya declares a one-for-five reverse stock split, how many shares are outstanding now? (Do not round intermediate calculations.)
What is the new par value per share? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
The owners' equity accounts for Freya International are shown here.
Explanation / Answer
(a)-1
Current Outstanding Shares = 46000/0.5
= 92,000
If Stock Split of four for One then the New Shares outstanding will be =92,000*4
=3,68,000
(a)-2 The New Par Value of the Share will be= 0.50/4
=$0.125
(b)-1 If Freya declares reverse split of 1 for 5 then the oustanding shares will be as follows
Current Outstanding share*5
=92,000/5
=18,400
(b)-2 The New Par Value per share will be =$0.50*5
= $2.50