Answer:
A. $16.67 per share
B. $13.33 per share
C. $60.00 per share
Explanation:
a. Calculation to determine what will its new share price be If Host issued a 20% stock dividend
Using this formula
New share price (stock dividend) = Old price / (1 + Stock dividend rate)
Let plug in the formula
New share price (stock dividend) =$20/(1+0.20)
New share price (stock dividend) =$20/1.20
New share price(stock dividend) =$16.67 per share
Therefore If Host issued a stock dividend, its new share price will be $16.67 per share
b. Calculation to determine what will its new share price be If Host does a 3:2 stock split
Using this formula
New share price=Old price/Stock split
Let plug in the formula
New share price=$20/(3/2)
New share price=$20/1.5
New share price= $13.33 per share
Therefore If Host does a 3:2 stock split its new share price will be $13.33 per share
c. Calculation to determine what will its new share price be If Host does a 1:3 reverse split
Using this formula
New share price=Old price/Reverse split
Let plug in the formula
New share price=$20/(1/3)
New share price=$20/0.33333
New share price= $60.00 per share
Therefore If Host does a 1:3 reverse split its new share price will be $60.00 per share
