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2 March, 11:22

Paiva Corporation splits its common stock 2 for 1, when the market value is $80 per share. Prior to the split, Paiva had 100,000 shares of $10 par value common stock issued and outstanding. After the split, the par value of the stock a. is reduced to $5 per sthare. b. is reduced to $2 per share c. is reduced to $20 per share d. remans the same

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  1. 2 March, 13:32
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    a. is reduced to $5 per share

    Explanation:

    Data given in the question

    Market value per share = $80

    Number of shares = 100,000

    Par value = $10

    So, after the split, the par value of the stock is

    = Par value of the stock : stock split ratio

    = $10 : 2

    = $5 per share

    By dividing the par value of the stock by the stock split ratio we can get the par value of the stock
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