Question

Please show all calculations. If using Excel, please show formulas and data.

Practice 9:

You started with a market price of $30 and 10,000 shares. Calculate number of shares after the split and the per share price:

*please do this example 2 ways.

part a: calculate as 4 individual splits

part b: calculate splits as successive.... begin with the original market price and number of shares and calculate the price and number of shares after 4 consecutive splits

split 1: 2 for 7 split

split 2: 3 for 2 split

split 3: 2 for 5 split

split 4: 3 for 1 split

Answer 1

Stock split results in increasing the number of outstanding shares and decreasing the price per share by same proportion.

a) calculate as 4 individual splits

Split	Market price	Number of shares
1	30*7/2 = 105	10000*2/7= 2857.14 (approx to 2857 shares)
2	30*2/3= 20	10000*3/2= 15000
3	30*5/2= 75	10000*2/5= 4000
4	30*1/3=10	10000*3/1=30000

b) calculate splits as successive

Split	Market price	Number of shares
1	30*7/2=105	10000*2/7= 2857.14 (approx to 2857 shares)
2	105*2/3= 70	2857*3/2= 4285.5    (appox to 4286)
3	70*5/2= 175	4286*2/5= 1714.4   (appox to 1714)
4	175*1/3= 58.33	1714*3/1= 5142