Reliable Tractors Company's stock performance has suffered due to several warranty-related lawsuits filed against the company. The company revamped its warranty program and introduced additional customer services to improve the customer experience. Yet, its stock price is only $7.50 per share. Management is planning a three-for-ten reverse stock split to increase the stock price and bring it closer to the average stock price in the industry. Assume that Bill Hanson, the last remaining cofounder of the firm, owns 840,000 shares.

a. How many shares will he own after the reverse stock split?

b. What is the anticipated price of the stock after the reverse stock split?

c. Because investors often have a negative reaction to a reverse stock split, assume the stock only goes up to 87 percent of the value computed in part b. What will the stock's price be?

d. How will the total value of Bill Hanson's holdings change from before the reverse stock split to after the reverse stock split (based on the stock value computed in part c.)?