Homework Answers
Correct option is 3rd $100590
Stock split is a corporate action to increase the number of outstanding shares by issuing more shares to existing shareholders.
As number of share increases , the price per share will be based on the total purchase value to the new number of share , price per share also get split.
So thr basis for share will be = Total purchase price of share / New number of Share
Original cost of Investment in Share =10×21 =$210
| Date | Type of Split | Total Shares | Basis |
| 1998 | 2 for 1 | 10×2/1 =20 | 210/20 =10.5 |
| 2002 | 2 for 1 | 20×2/1 =40 | 210/40=5.25 |
| 2003 | 3 for 2 | 40×3/2 =60 | 210/60=3.5 |
| 2003 | 3 for 2 | 60×3/2=90 | 210/90 ( Taking in ratio as the value is in decimals ) |
| 2006 | 2 for 1 | 90×2/1=180 | 210/180 |
| 2008 | 2 for 1 | 180×2/1=360 | 210/360 |
| 2010 | 2 for 1 | 360×2/1=720 | 210/720 |
| 2012 | 2 for 1 | 720×2/1= 1440 | 210/1440 |
Gain om sale of 1440 number of share = 1440(70-210/1440) = 100590
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