Gorton Corporation has 30,000 shares of $10 par value common stock outstanding when it announces a 2-for-1 stock split. Before the split, the stock had a market price of $120 per share.

After the split, how many shares of stock will be outstanding? Common Stock Outstanding?
What will be the approximate market price per share?

60,000 shares

$60 per share

o=i dont know

To determine the number of shares of stock that will be outstanding after the stock split, we need to multiply the current number of shares by the split ratio. In this case, the stock split announced is a 2-for-1 split, which means that for every one share held before the split, two shares will be held after the split.

So, to calculate the number of shares outstanding after the split, we can use the formula:
Number of shares after split = Number of shares before split * Split ratio

Number of shares after split = 30,000 shares * (2 shares / 1 share) = 60,000 shares

Thus, after the 2-for-1 stock split, there will be 60,000 shares of stock outstanding.

Now, to estimate the approximate market price per share after the split, we need to consider the effect of the split on the total market value of the company. The total market value is determined by multiplying the number of shares by the market price per share.

Before the split:
Number of shares = 30,000 shares
Market price per share = $120

Total market value before the split = Number of shares * Market price per share
= 30,000 shares * $120 = $3,600,000

Since the total market value of the company remains the same after the split, we can use this information to estimate the market price per share after the split.

After the split:
Number of shares = 60,000 shares (as calculated above)
Market price per share after the split = Total market value before the split / Number of shares after the split
= $3,600,000 / 60,000 shares
= $60

Therefore, after the 2-for-1 stock split, the approximate market price per share will be $60.