Before a 5-for-3 stock split,the shares outstanding were 45,000 shares at $15 par.After the split,what was the par value and number of shares?

Question

Quizplus · Accepted Answer

A 5-for-3 stock split means that for every 3 shares owned by an investor, they will receive 5 new shares. Therefore, the total number of outstanding shares after the split is 45,000 x (5/3) = 75,000 shares. 
The par value changes in proportion to the stock split ratio, so the new par value is $15 x (3/5) = $9/share. 
Therefore, the correct answer is B, 75,000 shares and $9/share.

Before a 5-For-3 Stock Split,the Shares Outstanding Were 45,000 Shares