Design Corporation has 400,000 shares of $10 par-value common stock issued and outstanding when the market price per share is $25 per share. By what amount will total equity increase when the company declares a 2:1 stock split

Question

14-04-2022
Business

contestada

Design Corporation has 400,000 shares of $10 par-value common stock issued and outstanding when the market price per share is $25 per share. By what amount will total equity increase when the company declares a 2:1 stock split

Respuesta :

Otras preguntas

What was the general feeling about the american dream amoung members of the lost generation

On November 1, Jovel Company loaned another company $170,000 at a 12.0% interest rate. The note receivable plus interest will not be collected until March 1 of

Where does the mains story begin? -Norway -Sweden -Denmark

What are some methods you could use to measure the amount of white in every juncos tail feathers imagine you had the equipment people and funding you needed to

the celestial sphere can be described as a ___

Dollar Value Motors asks Estimable Bank for a loan to increase its vehicle inventory. Estimable requires Flair, Dollar Value's president, sign a personal guaran

Sharon, a CPA for a large firm noticed that the company's accounting records drastically overstated the amount of inventory on hand, which led to overstating th

What do you think is the best piece of art? (It can be your opinion) I'm just curious about what kind of art people are into.

Chandler and Alexandra go shopping with an equal amount of money. Chandler buys 4 shirts and has $5 left. Alexandra buys 2 shirts, and a $12 pair of shorts, an

Grab Manufacturing Co. purchased a 10-ton draw press at a cost of $180,000 with terms of 5/15, n/45. Payment was made within the discount period. Shipping costs

anthougo anthougo · Answer 1 · 2022-04-25T11:41:38+02:00

The declaration of a 2:1 stock split does not affect the total equity and so it will remain at $4,000,000 (800,000 x $5).

What is a 2:1 stock split?

A 2:1 stock split increases the number of shares outstanding by 2 times while the par value reduces by 2 times.

The net effect of a stock split is that the number of shares outstanding increases just as the par value and market value of the shares decrease.

Data and Calculations:

Common stock issued and outstanding = 400,000 shares

Par value of shares = $10 per share

Total equity = $4,000,000 (400,000 x $10)

A declaration of a 2:1 stock split increases the number of common stock outstanding from 400,000 shares to 800,000 shares (400,00 x 2).

The market price will reduce to $12.50 ($25/2) and the par value will reduce to $5 ($10/2).

Thus, the declaration of a 2:1 stock split does not affect the total equity and so it will remain at $4,000,000 (800,000 x $5).

Learn more about stock split at https://brainly.com/question/14247504