The market value of Granger Corporation’s common stock had become excessively high. The stock was currently selling for $240 per share. To reduce the market price of the common stock, Granger declared a 3-for-1 stock split for the 200,000 outstanding shares of its $15 par common stock.
a. How will Granger Corporation’s books be affected by 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 the stock will be affected by the stock split.