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2 April, 08:40

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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  1. 2 April, 11:15
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    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
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