WW International (WWI) recently declared a 3-for-1 stock split for its common shares. Before the split, the firm's share price had risen to $450 per share and the firm's CFO felt that this high stock price inhibited trading in the firm's shares. Prior to the split, the firm had 10 million shares of stock outstanding and had net income of $40 million. a. Before the stock split, what was WWI's earnings per share? b. Following the stock split, how many shares of common stock did WWI have outstanding? c. What was the firm's earnings per share after the stock split? d. If you owned 100 shares of stock before the split, how much were the total earnings for your shares? How much were the total earnings on your post-split shares? e. Were you better off financially as the holder of 100 shares of pre-split stock after the 3-for-1 split? Explain.
WW International (WWI) recently declared a 3-for-1 stock split for its common shares. Before the split, the firm's share price had risen to $450 per share and the firm's CFO felt that this high stock price inhibited trading in the firm's shares. Prior to the split, the firm had 10 million shares of stock outstanding and had net income of $40 million. a. Before the stock split, what was WWI's earnings per share? b. Following the stock split, how many shares of common stock did WWI have outstanding? c. What was the firm's earnings per share after the stock split? d. If you owned 100 shares of stock before the split, how much were the total earnings for your shares? How much were the total earnings on your post-split shares? e. Were you better off financially as the holder of 100 shares of pre-split stock after the 3-for-1 split? Explain.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:wW International (WWI) recently declared a 3-for-1 stock split for its common shares. Before the split, the
firm's share price had risen to $450 per share and the firm's CFO felt that this high stock price inhibited trading in
the firm's shares. Prior to the split, the firm had 10 million shares of stock outstanding and had net income of $40
million.
a. Before the stock split, what was WWI's earnings per share?
b. Following the stock split, how many shares of common stock did WWI have outstanding?
c. What was the firm's earnings per share after the stock split?
d. If you owned 100 shares of stock before the split, how much were the total earnings for your shares? How
much were the total earnings on your post-split shares?
e. Were you better off financially as the holder of 100 shares of pre-split stock after the 3-for-1 split? Explain.
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