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The owners equity account for XYZ International are shown below: The current market price of XYZs shares is 5 per share. If XYZ declares a
The owners equity account for XYZ International are shown below: The current market price of XYZs shares is 5 per share. If XYZ declares a one for four reverse stock split.
- How many shares are outstanding now?
- What is the new par value per share?
c. What is the new share price?
d. Does the owners equity value change? Explain your answer.
E. Instead of the reverse split, if the company instead decides to declare a 12% stock dividend, how would the equity accounts table change?
\begin{tabular}{|l|r|} \hline & \multicolumn{1}{|c|}{} \\ \hline Ordinary shares (1 par value) & 200,000 \\ \hline Additional paid in capital & 3,800,000 \\ \hline Retained Earnings & 2,000,000 \\ \hline Total owner's equity & 6,000,000 \\ \hline \end{tabular}
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