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Bermuda Triangle Corp. (BTC) currently has 300,000 shares of stock outstanding that sell for \$80 per share. Assuming no market imperfections or tax effects exist, what will the share price be after:

a. BTC has a 5-for-3 stock split?
b. BTC has a 15% stock dividend?
c. BTC has a 42.5% stock dividend?
d. BTC has a 4-for-7 reverse stock split?
e. Determine the new number of shares outstanding in parts (a) through (d).

Solution Preview

a. BTC has a 5-for-3 stock split?

Number of shares =300,000

For every 3 shares now there are 5 shares

Hence the number of shares= 300,000 x 5/3= 500,000

Since the total value of stocks will not change

300,000 X 80= 500,000 X P

P= \$48

Shares outstanding= 500,000

b. BTC has a 15% stock dividend?

Number of new ...

Solution Summary

The solution calculates the share price after Stock Splits , Stock Dividends and Reverse stock split

\$2.49