On June 30, the board of directors of Sandals, Inc., declares a 2-for-1 stock split on its 24,000, $1 par, common shares. The market price of Sandals common stock is $29 on June 30. What are the number of shares, par value per share, and market price per share immediately after the 2-for-1 stock split

Question

Jamar Hanna

Business

4 March, 13:30

On June 30, the board of directors of Sandals, Inc., declares a 2-for-1 stock split on its 24,000, $1 par, common shares. The market price of Sandals common stock is $29 on June 30. What are the number of shares, par value per share, and market price per share immediately after the 2-for-1 stock split

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Kiley · Answer 1

a) Number of shares after stock split = Total outstanding shares before split * 2

=24, 000 shares * 2

=48,000 shares

Number of shares immediately after stock split is 48,000.

b) Under a stock split, the outstanding number of shares are increased as per the split. As per the given information, the split is stock is 2-for-1, therefore, after the stock split the number of outstanding shares will be twice of shares outstanding before the stock split.

Par value of each stock after split = 2

Par value per common stock before stock split = Par common shares / 2

Par value per common stock before stock split

= $1.00 / 2

=$0.50

c) Market price per stock after split = 2

Market value per stock after the split = Market price of Sandals common stock / 2

= $29/2

= $14.5