Question

Effect of Stock Split

Gino's Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Midwest. Gino's Restaurant Corporation, which had 100,000 shares of common stock outstanding, declared a 5-for-1 stock split (4 additional shares for each share issued).

a. What will be the number of shares outstanding after the split?
shares

b. If the common stock had a market price of $200 per share before the stock split, what would be an approximate market price per share after the split?
$ per share

Answer 1

A = 500000
b = 40

Answer 2

Gino's Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Midwest. Gino's Restaurant Corporation, which had 72,000 shares of common stock outstanding, declared a 3-for-1 stock split.