A corporation has 50,000 shares of $25 par stock outstanding that has a current market value of $150 per share. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be approximately

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After the 5-for-1 stock split, each shareholder will receive 5 shares for every 1 share they currently own. Therefore, the number of outstanding shares will increase from 50,000 to 250,000 (5 times more). The total value of the shares will remain the same ($150 per share x 50,000 shares = $7,500,000), but the par value of each share will decrease from $25 to $5 (25/5 = 5). Therefore, the market value of the stock after the split will be approximately $30 ($7,500,000/250,000 shares = $30 per share).

A Corporation Has 50,000 Shares of $25 Par Stock Outstanding