Toombs Media Corp

question 44

Multiple Choice

Toombs Media Corp.recently completed a 3-for-1 stock split.Prior to the split,its stock sold for $90 per share.The firm's total market value was unchanged by the split.Other things held constant,what is the best estimate of the stock's post-split price?

• A)$30.00
• B)$31.50
• C)$33.08
• D)$34.73
• E)$36.47

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Definitions:

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, accounting for time value of money.

Compounded Annually

A method of calculating interest where the interest is added to the principal at the end of each year, and the following year's interest is calculated on the total amount.

Amortization of Bond Discount

The gradual reduction of a bond discount over the life of the bond, transferring it from the balance sheet to interest expense on the income statement.

Semiannual Interest

Interest that is calculated and paid twice a year on investments or loans.