Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Worst Buy Company has had a lot of complaints from customers of late, and its stock price is now only $4 per share. It is

image text in transcribed

Worst Buy Company has had a lot of complaints from customers of late, and its stock price is now only $4 per share. It is going to employ a one-for-six reverse stock split to increase the stock value. Assume Dean Smith owns 180 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.) 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.) c. Because investors often have a negative reaction to a reverse stock split, assume the stock only goes up to 80 percent of the value computed in part b. What will the stock's price be? (Do not round intermediate calculations and round your answer to 2 decimal places.) d. How has the total value of Dean Smith's holdings changed from before the reverse stock split to after the reverse stock split (based on the stock value computed in part c)? 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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

School Finance A Policy Perspective

Authors: Allan Odden, Lawrence Picus

5th Edition

0078110289, 978-0078110283

More Books

Students also viewed these Finance questions

Question

How does the Internet help consumers to spread word-of-mouth?

Answered: 1 week ago

Question

How many degrees of freedom does ????e have?

Answered: 1 week ago