The market value of Yeates Corporation's common stock had become excessively high. The stock was currently selling for $240 per share. To reduce the market price of the common stock, Yeates declared a 3-for-1 stock split for the 100,000 outstanding shares of its $10 par value common stock. Required: b. Determine the number of common shares outstanding and the par value after the split.

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Business

Tomas Rogers

27 May, 09:27

The market value of Yeates Corporation's common stock had become excessively high. The stock was currently selling for $240 per share. To reduce the market price of the common stock, Yeates declared a 3-for-1 stock split for the 100,000 outstanding shares of its $10 par value common stock. Required: b. Determine the number of common shares outstanding and the par value after the split.

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Answers (1)

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Steven Cummings · Answer 1

a. 300,000 Shares

b. $3.33 per share

Explanation:

Data provided

Outstanding shares = 100,000

Split ratio = 3

Par value common stock = 10

The computation of the number of common shares outstanding and the par value after the split is shown below:-

Number of common Share outstanding = Outstanding shares * Split ratio

= 100,000 * 3

= 300,000 Shares

Par value = Par value common stock : Split ratio

= $10 : 3

= $3.33 per share