Total shares outstanding will be
A) 20,000 under alternative I and zero under alternative II.
B) 40,000 under alternative I and 60,000 under alternative II.
C) 60,000 under alternative I and 40,000 under alternative II.
D) 60,000 under both alternative I and alternative II.

Question

Quizplus · Accepted Answer

Under alternative I, they will issue 40,000 new shares to the public and also offer the current shareholders the chance to purchase additional shares, which would result in a total of 60,000 shares outstanding. 
Under alternative II, they will buy back 20,000 shares, leaving only 40,000 shares outstanding. Therefore, the total shares outstanding will be 60,000 under alternative I and 40,000 under alternative II.

Total Shares Outstanding Will Be