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8 October, 15:02

In recent years Constable Inc. has suffered losses, and its stock currently sells for only $0.50 per share. Management wants to use a reverse split to get the price up to a more "reasonable" level, which it thinks is $25 per share. How many of the old shares must be given up for one new share to achieve the $25 price, assuming this transaction has no effect on total market value?

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  1. 8 October, 15:18
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    Total value of the new share = total value of old share

    Given that total value of old share = $25

    Number of shares * Price per share = 43

    Also, given that price per share is $0.50, number of shares = 25/0.5 = 50

    Number of Old shares must be give up for one new share to achieve the $25 price is 50 Shares.
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