24) Worst Buy Company has had a lot of complaints from customers of late, and its stock...
Question:
24)
Worst Buy Company has had a lot of complaints from customers of late, and its stock price is now only $2 per share. It is going to employ a one-for-six reverse stock split to increase the stock value. Assume Dean Smith owns 72 shares. |
a. | How many shares will he own after the reverse stock split?(Do not round intermediate calculations and round your answer to the nearest whole number.) |
Number of shares |
b. | What is the anticipated price of the stock after the reverse stock split?(Do not round intermediate calculations and round your answer to 2 decimal places.) |
Anticipated stock price | $ |
c. | Because investors often have a negative reaction to a revere stock split, assume the stock only goes up to 80 percent of the value computed in partb. What will the stocks price be?(Do not round intermediate calculations and round your answer to 2 decimal places.) |
Stock price | $ |
d. | How has the total value of Dean Smiths holdings changed from before the reverse stock split to after the reverse stock split (based on the stock value computed in partc)? To get the total value before and after the split, multiply the shares held times the stock price.(Input the amount as a positive value. Do not round intermediate calculations and round your answer to 2 decimal places.) |
Dean Smiths holdings (Click to select)Increased bydecreased by$ |
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen