Pharma Duece Corporation, which manufactures biotech drugs, has been experiencing a tremendous growth in the price of its common stock. The stock price increased from $4.50 on January 1, 2001 to $18.00 per share on December 31, 2005. Its current net worth statement is as follows: $$\begin{array} { l r }
\text { Common Stock } ( 350,000 \text { shares } ) & \$ 21,150,000 \
\text { Retained Earnings } & \$ 1,350,000 \
\text { Total Net Worth } & \$ 22,500,000
\end{array}$$ A) What changes would occur in the above statement of net worth after a 2 for 1 stock split?

Question

Pharma Duece Corporation, which manufactures biotech drugs, has been experiencing a tremendous growth in the price of its common stock. The stock price increased from $4.50 on January 1, 2001 to $18.00 per share on December 31, 2005. Its current net worth statement is as follows: $$\begin{array} { l r } 
\text { Common Stock } ( 350,000 \text { shares } ) & \$ 21,150,000 \
\text { Retained Earnings } & \$ 1,350,000 \
\text { Total Net Worth } & \$ 22,500,000
\end{array}$$ A) What changes would occur in the above statement of net worth after a 2 for 1 stock split?

Quizplus · Accepted Answer

The Answer of Pharma Duece Corporation, which manufactures biotech drugs, has been experiencing a tremendous growth in the price of its common stock. The stock price increased from $4.50 on January 1, 2001 to $18.00 per share on December 31, 2005. Its current net worth statement is as follows: $$\begin{array} { l r } 
\text { Common Stock } ( 350,000 \text { shares } ) & \$ 21,150,000 \
\text { Retained Earnings } & \$ 1,350,000 \
\text { Total Net Worth } & \$ 22,500,000
\end{array}$$ A) What changes would occur in the above statement of net worth after a 2 for 1 stock split?

Pharma Duece Corporation, Which Manufactures Biotech Drugs, Has Been Experiencing