The common stock of Checkers, Inc. is selling for $40 a share. The par value per share is $1. Currently, the firm has a total market value of $78,600. How many shares of stock will be outstanding if the firm does a 5-for-3 stock split?

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Quizplus · Accepted Answer

The firm's total market value is $78,600, and with the stock currently selling for $40 a share, the number of shares outstanding before the split is $78,600 / $40 = 1,965 shares. After a 5-for-3 stock split, the number of shares will increase to (5/3) * 1,965 = 3,275 shares.

The Common Stock of Checkers, Inc