Question

(Stock splits and stock​ dividends)  ​Chaney's Fatburner​ Gyms, Inc. operates a chain of exercise facilities throughout...

(Stock splits and stock​ dividends)  ​Chaney's Fatburner​ Gyms, Inc. operates a chain of exercise facilities throughout the Midwest. The firm appeals to​ middle-aged men who suffer from obesity problems and want to improve their health by entering an exercise program. The firm currently has 8 comma 000 comma 000 shares of stock outstanding that have a current market price of ​$11.08. If all else remains​ constant, what will be the price of​ Chaney's shares after each of the​ following?

a.  A stock dividend of 20.8 percent.

b.  A four​-for-one stock split.

c.  A stock dividend of 32.6 percent.

d.  What would be the total number of shares outstanding after a through c​?

a.  The price of​ Chaney's shares after a stock dividend of 20.8 % will be ​$

​(Round to the nearest​ cent.)

b.  The price of​ Chaney's shares after a four​-for-one stock split will be ​$

​(Round to the nearest​ cent.)

c. The price of​ Chaney's shares after a stock dividend of 32.6 % will be ​$

nothing. ​(Round to the nearest​ cent.)

d.  The total number of shares outstanding after the stock dividend of 20.8 % is

shares.  ​(Round to the nearest​ integer.)

The total number of shares outstanding after the four​-for-one stock split is

shares.  ​(Round to the nearest​ integer.)

The total number of shares outstanding after the stock dividend of 32.6 % is

shares.  ​(Round to the nearest​ integer.)

Homework Answers

Answer #1

A: Current equity = Shares* Share price

=8000,000* 11.08

=88640000

Number of shares after dividend = 8000000*120.8% = 9664000

Share price = Equity/ Number of shares

= 88640000/9664000

=$9.17

B: Number of shares after split = 8000000*4 = 32000000

Share price = Equity/ Number of shares

= 88640000/32000000

= $2.77

C: Current equity = Shares* Share price

=8000,000* 11.08

=88640000

Number of shares after dividend = 8000000*132.6% = 10608000

Share price = Equity/ Number of shares

= 88640000/10608000

= $8.36

D: Number of shares after stock dividend of 32.6% =8000000*132.6% = 10608000

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