Robinson's Has 16,000 Shares of Stock Outstanding with a Par

question 62

Multiple Choice

Robinson's has 16,000 shares of stock outstanding with a par value of $1.00 per share and a market price of $36 a share.The balance sheet shows $16,000 in the common stock account,$315,000 in the capital in excess of par account,and $189,000 in the retained earnings account.The firm just announced a 3-for-2 stock split.How many shares of stock will be outstanding after the split?

• A)10,000 shares
• B)12,500 shares
• C)20,000 shares
• D)22,500 shares
• E)24,000 shares

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Definitions:

Insurance

A financial product providing protection against possible financial losses or damages, involving regular payments in exchange for the promise of compensation under certain conditions.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, resulting in cost per unit of output decreasing with increasing scale.

Diseconomies of Scale

The phenomenon where production costs per unit increase as an operation scales up, typically due to inefficiencies or increased complexities.

Long-Run

The long-run refers to a period in economics where all factors of production and costs are variable, allowing all inputs to be adjusted.