Question
Company Oakland has 100 shares of common stock outstanding. Its current stock price is $10 per share. Its current book value is $800. Assuming there
Company Oakland has 100 shares of common stock outstanding. Its current stock price is $10 per share. Its current book value is $800. Assuming there are no personal income taxes or transaction costs, answer the following questions (i) (Iii).
(i) If the company declares a 100% stock dividends, what would be the (a) share price, (b) number of shares outstanding, (c) book value of equity, and (d) market value of equity after the stock dividends?
(ii) If the company declares a 2-for-1 stock split, what would be the (a) share price, (b) number of shares outstanding, (c) book value of equity, and (d) market value of equity after the stock split?
(iii) If the company declares a 1-for-2 reverse stock split, what would be the (a) share price, (b) number of shares outstanding, (c) book value of equity, and (d) market value of equity after the reverse stock split?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started