Robinson's Has 12,000 Shares of Stock Outstanding with a Par

question 59

Multiple Choice

Robinson's has 12,000 shares of stock outstanding with a par value of $1 per share and a market price of $24.20 a share.The firm just announced a four-for-three stock split.What will the market price per share be after the split?

• A)$18.15
• B)$17.65
• C)$18.25
• D)$30.46
• E)$32.27

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Definitions:

Lessor

The party who rents or leases property to another; the owner of the property being rented or leased.

After-Tax Cost of Debt

The net cost to a company for borrowing funds after adjusting for the tax deductibility of interest payments.

Marginal Tax Rates

The rate at which the last dollar of income is taxed, thereby representing the rate of tax applied to each additional dollar of income.

Lease Payments

Regular payments made by the lessee to the lessor for the use of an asset.