Grullon Co

question 60

Multiple Choice

Grullon Co.is considering a 8-for-4 stock split.The current stock price is $75.00 per share,and the firm believes that its total market value would increase by 6% as a result of the improved liquidity that should follow the split.What is the stock's expected price following the split?

• A) $47.30
• B) $41.34
• C) $40.15
• D) $39.75
• E) $31.40

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Definitions:

Residual Income

This is the amount of income that exceeds the minimum rate of return.

Investment Opportunity

An option to invest capital with the expectation of achieving a financial return.

Delivery Cycle Time

The total time taken from the receipt of a customer order to the delivery of the product, indicating the efficiency of the entire supply chain process.

Residual Income

The income that remains after deducting all costs, including opportunity costs, from business operations or investments.