The Tinslow Co. has 125,000 shares of stock outstanding at a market price of $93 a share. The company has just announced a 7-for-3 stock split. What will the market price per share be after the split?

Question

Quizplus · Accepted Answer

Before the split, the total value of the 125,000 shares is:
$93/share * 125,000 shares = $11,625,000

After the split, the number of shares increases by 7/3 times, which means:
New number of shares = 125,000 * (7/3) = 291,666.67, rounded to 291,667

The stock price per share will decrease proportionally to maintain the same total value. 
The new market price per share will be:
$11,625,000 / 291,667 = $39.86, rounded to the nearest cent

Therefore, the correct answer is B.