Question

Albany Motors recently completed a 3-for-1 stock split. Prior to the split, the company had 10 million shares outstanding and its stock price was $150 per share. After the split, the total market value of the company's stock equaled $1.5 billion. What was the price of the company's stock following the stock split

Answer 1

$50

Explanation:

The computation of the price of the company's stock following the stock split is shown below:-

Number of shares = 3 × 10 million

= 30 million

Price of the company's stock

= Total market value ÷ Number of shares outstanding

= 1.5 × 10^9 ÷ 30 × 10^6

= 1.5 × 10^2 ÷ 3

= 150 ÷ 3

= $50

We simply applied the above formulas so that the price of the company stock after stock split could come