The market value of Yeates Corporation’s common stock had become excessively high. The stock was currently selling for $270 per
share. To reduce the market price of the common stock, Yeates declared a 3-for-1 stock split for the 310,000 outstanding shares of its $12 par value common stock. Required: a. What entry will be made on the books of Yeats Corporation for the stock split? b. Determine the number of common shares outstanding and the par value after the split. c. Explain how the market value of stock will be affected by the stock split ?
1 answer:
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Answer:
a) 175,437.77
b)
(I split into two arrays as I couldn't put the entire information into one)
c) because of the time value of money the principal generates interest over time making the installment pay up both concept principal and interest.
d) they decrease as the principal decreases over time as the lease payment exceeds the interest accrued over the year.
Explanation:
a) it will record at the present value of the lease payment annuity
C 24,500
time 12
rate 0.09
PV $175,437.7693
b)
we build the table starting withthe beginning lease value
calcualte the interest accrued over the year and subtract the lease payment
this makes a new balance of the loan principal which start the process again until it is fully paid.