Question

Brinkley Resources stock has increased significantly over the last five years, selling now for $175 per share. Management feels this price is too high for the average investor and wants to get the price down to a more typical level, which it thinks is $25 per share. What stock split would be required to get to this price, assuming the transaction has no effect on the total market value

Answer 1

Answer:

$7.00

Explanation:

Calculation for Brinkley Resources stock split

The current value of the share = $175

The management want the share split to the price = $25

Hence, shares issued for one share would be

= $175 / $25

= $7.00

Therefore the stock split that would be required to get to this price, assuming the transaction has no effect on the total market value would be $7.00