Question

Prior to a 2-for-1 stock split, Marcus, Inc. stock sold for $120 per share. If the...

Prior to a 2-for-1 stock split, Marcus, Inc. stock sold for $120 per share. If the firm's total market value increased by 6% as a result of increased liquidity caused by the split, what was the stock price following the split?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

let

no. of shares outstanding before split = n

price per share before split = p = $120

market value of shares before split = p*n = 120n

due to the split , 2-for-1

No. of shares after split, N = 2*n

Price per share after split = P

Market value of shares after split = 1.06*M

also , Market value of shares after split = 2n *P

thus, 2n*P = 1.06*M

substituting value of M in above equation

2n*P = 1.06*(120n)

2P = 1.06*120

P = (1.06*120)/2 = $63.6

Hence price per share after split, = $63.6

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Verizon Wireless has just announced a 2-for-1 stock split, effective immediately. Prior to the split,...
1. Verizon Wireless has just announced a 2-for-1 stock split, effective immediately. Prior to the split, Verizon Wireless had a market value of $10 billion with 200 million shares outstanding. a) Assuming that the split conveys no new information about the company, what is the value of the company, the number of shares outstanding, and price per share after the split? b) If the actual market price immediately following the split is $34.00 per share, what does this tell us...
1 ​Ms. Jessica owns shares of Durian Company, which recently completed a 3-for-2 stock ​split. Prior...
1 ​Ms. Jessica owns shares of Durian Company, which recently completed a 3-for-2 stock ​split. Prior to the split, she has 2% of company’s 10 million shares outstanding and its ​stock price was $200 per share. Before the split, the total market value of the company’s ​stock equaled $2 billion. 1.1 ​Determine the total number of shares and price per share for Durian Company after a ​3-for-2 stock split. Does the market value change? ​ 1.2 shares that Ms. Jessica...
On June 13, the board of directors of Siewert Inc. declared a 2-for-1 stock split on...
On June 13, the board of directors of Siewert Inc. declared a 2-for-1 stock split on its 150 million, $1 par, common shares, to be distributed on July 1. The market price of Siewert common stock was $28 on June 13. Prepare the journal entry to record the stock split if it is not to be effected in the form of a stock dividend. What is the par per share after the split?
A reverse stock split is sometimes used as a means of: decreasing the market value per...
A reverse stock split is sometimes used as a means of: decreasing the market value per share of stock. decreasing the liquidity of a stock. raising cash from current stockholders. keeping a firm's stock eligible for trading on a stock exchange. increasing the number of stockholders.
A corporation, which had 12,000 shares of common stock outstandingdeclared a 6-for-1 stock split. What will...
A corporation, which had 12,000 shares of common stock outstandingdeclared a 6-for-1 stock split. What will be the number of shares outstanding after the split? ) If the common stock had a market price of $240 per share before the stock split, what would be an approximate market price per share after the split?
What is the earnings per share? Orange Inc.’s common stock sold for $2.75 per share at...
What is the earnings per share? Orange Inc.’s common stock sold for $2.75 per share at the end of this year. The company paid a common stock dividend of $0.55 per share this year. It also provided the following data excerpts from this year’s financial statements: Ending Balance Beginning Balance Cash $35,000 $30,000 Accounts receivable $60,000 $50,000 Inventory $55,000 $60,000 Current assets $ 150,000 $ 140,000 Total assets $450,000 $460,000 Current liabilities $60,000 $40,000 Total liabilities $ 130,000 $ 120,000...
A company declared a 5 for 3 stock split when the stock was selling at $250...
A company declared a 5 for 3 stock split when the stock was selling at $250 per share. Prior to the split, the firm had $50 million in common stock with a $6 par. Which of the following answers would be correct after the split? Common stock = $83.35 mil Stock price = $417 Par value = $3.60 Stock price = $150 Common Stock = $30 mil Stock price = $150 Par value = $10 Stock price = $41.70
1.A firm's stock sells for $200 a share. What will be the price after a (1)...
1.A firm's stock sells for $200 a share. What will be the price after a (1) two-for-one split (2) four-for-one split (3) one-for-two reverse split? 2. A firm's balance sheet has the following entries: Cash $  30,000,000 Total assets 100,000,000 Common stock (10,000,000 shares outstanding, $2 par) 20,000,000 Additional paid-in capital 5,000,000 Retained earnings 35,000,000 3. What will be each of these balance sheet entries after a (1) $2 a share cash dividend (2) four-for-one split (3) 5 percent stock dividend...
In June 2014, Apple went through a 7-for-1 stock split. Immediately after the stock split, Apple’s...
In June 2014, Apple went through a 7-for-1 stock split. Immediately after the stock split, Apple’s stock price fell from $645 per share to $94 per share. Did Apple directly pay its shareholders any cash in that event? By what percentage does the market value of Apple’s common stock increase? Why is stock split an effective way for Apple to reward common stock shareholders?
In June 2014, Apple went through a 7-for-1 stock split. Immediately after the stock split, Apple’s...
In June 2014, Apple went through a 7-for-1 stock split. Immediately after the stock split, Apple’s stock price fell from $645 per share to $94 per share. Did Apple directly pay its shareholders any cash in that event? By what percentage does the market value of Apple’s common stock increase? Why is stock split an effective way for Apple to reward common stock shareholders?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT