The company declares a two-for-one stock split. How many shares are outstanding
ID: 2804609 • Letter: T
Question
The company declares a two-for-one stock split. How many shares are outstanding now? (Do not round intermediate calculations.)
The company declares a two-for-one stock split. What is the new par value per share? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
The company declares a one-for-four reverse stock split. How many shares are outstanding now? (Do not round intermediate calculations.)
The company declares a one-for-four reverse stock split. What is the new par value per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The owners’ equity accounts for Hexagon International are shown here:
Explanation / Answer
Value of Common Stock = $38,000
Par Value = $0.50
Number of Common Stock = Value of Common Stock / Par Value
Number of Common Stock = $38,000 / $0.50
Number of Common Stock = 76,000
Answer a.
If company declares a two-for-one stock split:
New Number of shares = Old Number of shares * 2
New Number of shares = 2 * 76,000
New Number of shares = 152,000
Answer a-2.
New Par Value = Old Par Value / 2
New Par Value = $0.50 / 2
New Par Value = $0.250
Answer b-1.
If company declares a one-for-four stock split:
New Number of shares = Old Number of shares / 4
New Number of shares = 76,000 / 4
New Number of shares = 19,000
Answer a-2.
New Par Value = Old Par Value * 4
New Par Value = $0.50 * 4
New Par Value = $2.00