Question

Swirl operations,inc.has 500000 shares of stock outstanding that sells for$70 per share. What will the share price be after the company has a five -for-three stock split?​

Answer 1

Answer:

$42

Step-by-step explanation:

A five-for-three stock split means that for every 3 stocks held by an investor there will be now 5 stocks.

Therefore the new number of outstanding shares is;

$\frac{5}{3}*500000=833333\frac{1}{3}$

which can be rounded to 833333 shares

Also, a five -for-three stock split means that for every $5 of share price, this will be reduced to $3.

The new share price becomes;

$\frac{3}{5}*70=42$

Therefore, the share price of the company after making a five -for-three stock split is $ 42