Question
Bill issued 200,000 shares of $2 par value stock. The book value of Bills common stockholders' equity is equal to $20 million. On August 1,
Bill issued 200,000 shares of $2 par value stock. The book value of Bill’s common stockholders' equity is equal to $20 million. On August 1, he implements a two-for-one stock split. After the stock split, the total number of shares outstanding is 400000 shares, the total par value is $1 and the total book value is $20 million.
Assuming the market price per share of Bill’s stock was $150/share before the split, what should be the market price per share after the split?
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