Question

Problem 14-05 Stock Split JPix management is considering a stock split. JPix currently sells for $80 per share and a 3-for-2 stock split is contemplated. What will be the company's stock price following the stock split, assuming that the split has no effect on the total market value of JPix's equity

Answer 1

Answer:

$53.33

Explanation:

The computation of the stock price is shown below;

= Selling price per share × stock split ratio

where,

Selling price per share is $80 per share

And, the stock split ratio is 2 ÷ 3

Now placing these values to the above formula

So, the stock price is

= $80 per share × 2 ÷ 3

= $53.33

We simply applied the above formula so that the company stock price could come