Gorton Corporation has 30,000 shares of $10 par value common stock outstanding, when it announces a 2-for-1 stock split. Before the split, the stock had a market price of $120 per share. After the split, how many shares of stock will be outstanding? Common Stock Outstanding? What will be the approximate market price per share?

Question

Business

Karma Mendoza

26 October, 05:49

Gorton Corporation has 30,000 shares of $10 par value common stock outstanding, when it announces a 2-for-1 stock split. Before the split, the stock had a market price of $120 per share. After the split, how many shares of stock will be outstanding? Common Stock Outstanding? What will be the approximate market price per share?

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Answers (1)

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Cornelius Valencia · Answer 1

Common Stock Outstanding Shares=60,000 shares

Market Price Per share = $60

Explanation:

2-for-1 stock split means that every shareholder will receive additional common stock on each share.

Given dа ta:

Number of shares=30,000 shares

Market price per share=$120

Required:

Common Stock Outstanding=?

Market Price per share=?

Solution:

After split, Common Stock Outstanding Shares=30,000 shares*2

Common Stock Outstanding Shares=60,000 shares

Due to the split the price of share will become half.

Market Price per share=$120/2

Market Price Per share = $60