Question

Bermuda Triangle Corporation (BTC) currently has 570,000 shares of stock outstanding that sell for $90 per share. Assume no market imperfections or tax effects exist. Determine the share price and new number of shares outstanding if: (Do not round intermediate calculations. Round your price per share answers to 2 decimal places, e.g., 32.16, and shares outstanding answers to the nearest whole number, e.g., 32.) a. BTC has a five-for-three stock split. Price per share $ Shares outstanding b. BTC has a 12 percent stock dividend. Price per share $ Shares outstanding c. BTC has a 41.0 percent stock dividend. Price per share $ Shares outstanding d. BTC has a four-for-seven reverse stock split. Price per share $ Shares outstanding

Answer 1

Current Number of share outstanding = 570,000

Current Stock price = $90.

Market capitalization = 570,000 × $90

= $51,300,000

Market capitalization is $51,300,000.

a.

company has offered five-for-three stock split. So,

Number of stock after split = (570,000 / 3) × 5

= 950,000

Number of stock after split is 950,000.

Stock price after split = ($90 / 5) × 3

= $54

Stock price after split is $54.

b.

Company has offered 12 percent stock dividend.

So, number of stock after stock dividend = 570,000 × (1 + 12%)

= 638,400

number of stock after stock dividend is 638,400.

Stock price after stock dividend = $51,300,000 / 638,400

= $80.36.

Stock price after stock dividend is $80.35.

c.

Company has offered 41 percent stock dividend.

So, number of stock after stock dividend = 570,000 × (1 + 41%)

= 803,700

number of stock after stock dividend is 803,700.

Stock price after stock dividend = $51,300,000 / 803,700

= $63.83.

Stock price after stock dividend is $63.83.

d.

Company offered four-for-seven reverse stock split..

Number of stock after split = 570,000  4 / 7

= 325,714

Number of stock after reverse split is 325,714.

Stock price after reverse split = $90 × 7 / 4

= $157.50

Stock price after reverse split is $157.50.