Justine owns 5%

of a corporation's shares. If that corporation had 3 million shares in circulation but is going to sell 1 million new shares to raise money to finance a new operation, what percent of the corporation will Justine own?(1 point)
Responses

7.5%
7.5 percent

5%
5 percent

4%
4 percent

3.75%

1 answer

To determine what percent of the corporation Justine will own after the new shares are issued, we start by calculating the total number of shares after the new shares are issued.

Initially, the corporation has 3 million shares in circulation. When it issues 1 million new shares, the total number of shares becomes:

3,000,000 (original shares) + 1,000,000 (new shares) = 4,000,000 total shares.

Justine owns 5% of the original shares. To find out how many shares that corresponds to, we calculate:

5% of 3,000,000 = 0.05 * 3,000,000 = 150,000 shares.

Now, we need to calculate what percent of the new total (4,000,000 shares) these 150,000 shares represent.

The percentage is calculated as follows:

(150,000 shares / 4,000,000 total shares) * 100 = 3.75%.

Therefore, after the new shares are issued, Justine will own 3.75% of the corporation.