Use the information for the question(s)below.
Luther Industries currently has 5 million shares outstanding and its stock is currently trading at $40 per share.
-Assuming Luther issues a 5:2 stock split,then the number of shares Luther will have outstanding following the split is closest to:
A)25.0 million.
B)12.5 million.
C)2.0 million.
D)16.0 million.

Question

Quizplus · Accepted Answer

In a 5:2 stock split, for every 2 shares, shareholders receive 5 shares. Therefore, the number of shares will increase by a factor of 5/2. The new number of shares = 5 million * (5/2) = 12.5 million shares.

Use the Information for the Question(s)below