Question

Nevada Corporation has 30,000 shares of $25 par stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be

Answer 1

Answer:

150,000 shares

Explanation:

Nevada currently has 30,000 shares and if it issues a 5 for 1 stock split, it means that it will issue 4 new shares per every outstanding share. The total number of shares should increase to 30,000 x 5 = 150,000 shares. The price of current outstanding shares should be divided equally by 5 = $120 / 5 = $24 per share.