Purchase Solution

# Stock split, stock dividend, reverse stock split

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Bermuda Triangle Corporation (BTC) currently has 400,000 shares of stock outstanding that sell for \$90.00 per share. Assuming no market imperfections or tax effects exit, what will the share price be after:
A. BTC has a five-for-three stock split?
B. BTC has a 15 percent stock dividend?
C. BTC has 42.5 percent stock dividend?
D. BTC has a four-for-seven split?
E. Determine the new number of shares outstanding in parts A-D.

##### Solution Summary

The solution calculates the effect on stock price of Stock Dividend, Stock Split and Reverse Stock Split and calculates the number of shares outstanding after Stock Dividend, Stock Split and Reverse Stock Split.

##### Solution Preview

No of shares= 400,000
Current share price= \$90
Total value= \$36,000,000 =90*400000
This value will not change by stock splits or stock dividends as these are accounting changes that will not impact the cash flow to the company

A. BTC has a five-for-three stock split?

5 for 3 stock split
No of current shares= 400,000
Total no of new ...

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