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12 May, 19:54

Gorton Corporation has 30,000 shares of $10 par value common stock outstanding, when it announces a 2-for-1 stock split. Before the split, the stock had a market price of $120 per share. After the split, how many shares of stock will be outstanding? Common Stock Outstanding? What will be the approximate market price per share?

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  1. 12 May, 21:56
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    Common Stock Outstanding Shares=60,000 shares

    Market Price Per share = $60

    Explanation:

    2-for-1 stock split means that every shareholder will receive additional common stock on each share.

    Given dа ta:

    Number of shares=30,000 shares

    Market price per share=$120

    Required:

    Common Stock Outstanding=?

    Market Price per share=?

    Solution:

    After split, Common Stock Outstanding Shares=30,000 shares*2

    Common Stock Outstanding Shares=60,000 shares

    Due to the split the price of share will become half.

    Market Price per share=$120/2

    Market Price Per share = $60
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