Use the following information to answer the following question(s).
Your firm is planning a 2 for 1 share split.The market price for the share has been $84.The following table presents the equity portion of your firm's balance sheet before the split.
Common share

-Immediately after the share split, an investor who owned 100 shares before the split will own [blank].
A)100 shares worth a total of $4200
B)200 shares worth a total of $8400
C)200 shares worth a total of $16,800
D)200 shares with a par value of $8.00 each

Question

Use the following information to answer the following question(s).
Your firm is planning a 2 for 1 share split.The market price for the share has been $84.The following table presents the equity portion of your firm's balance sheet before the split.
Common share
 
-Immediately after the share split, an investor who owned 100 shares before the split will own [blank].
A)100 shares worth a total of $4200 
B)200 shares worth a total of $8400 
C)200 shares worth a total of $16,800 
D)200 shares with a par value of $8.00 each

Quizplus · Accepted Answer

After the 2 for 1 split, each share will be split into 2. 
So, the number of outstanding shares will be 100 * 2 = 200.
The market price will be halved, so the new market price will be $42 ($84/2).
The total value of the investor's shares will be 200 * $42 = $8400.

Use the Following Information to Answer the Following Question(s)