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Copper Grill Restaurant Corporation wholesales ovens and ranges to restaurants through- out the Southwest. Copper Grill...

Copper Grill Restaurant Corporation wholesales ovens and ranges to restaurants through- out the Southwest. Copper Grill Restaurant Corporation, which had 50,000 shares of com- mon stock outstanding, declared a 3-for-1 stock split. a. What will be the number of shares outstanding after the split? b. If the common stock had a market price of $210 per share before the stock split, what would be an approximate market price per share after the split?

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Answer #1

(a) Number of shares outstanding after the split = 150,000 Shares

Number of Shares outstanding after 3-for-1 stock split

= Number of shares before stock split x Stock split ratio

= 50,000 shares x 3/1

= 150,000 Shares         

(b) Approximate market price per share after the split = $70 per share

Market price per share after the split = Marker price before stock split x Reverse of Stock split ratio

= $210 per share x 1/3

= $70 per share

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