Garber Corporation had 20,000 shares of $12 par value common stock outstanding and declared a four-for-one stock split. How many new shares of stock would then be outstanding and what would be the par value of the new stock?
What will be an ideal response?
After the stock split, the corporation will have 80,000 shares outstanding at a par value of $3.00 per share.
After a four-for-one stock split, the number of shares will be four times the number before the split (or 20,000 × 4 = 80,000) and the par value will be one-fourth of what it was before the split (or $12 × 1/4 = $3).
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