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i have the answers for the question but i dont understand the solution Question(9.3 It has been an excellent year for Projek Laluan Utama Berhad

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Question(9.3 It has been an excellent year for Projek Laluan Utama Berhad (PLUB), a toll concessionaire company. The company board of directors wanted to reward its shareholders. The shareholders equity account is shown below, and its current market share price is RM10 per share. RM 500,000 10,000,000 Preferred Shares Ordinary Shares (10 million shares @ RMI pari passu) Paid in capital in excess of par Retained Earnings (Distributable) RE Total shareholders' equity 15,000,000 25,500,000 51,000,000 a. Assuming capital includes all paid in capital, advice the board of director on; I. The maximum dividend per share payable to its shareholders. (3 marks) II. The options of rewarding independently via a) 2 for one share split of the ordinary share 9:1 b) cash dividend of RM0.50 per share and c) share dividend of 5% on ordinary shares (6 marks) Question 9.3 The maximum dividend per share payable -RM 25,500,000 (RE) / 10,000,000 (OS) = RM25.50 Shareholders Equity account recast (all figures in RM,000) (a) (b) 2:1 Share Cash 5% Split Dividend Share Dividend Preferred Share 500 500 500 Ordinary Share (par) 10,000 10,000 10,500 Paid-in Capital 15,000 15,000 39,500 19500 In excess of par Retained Earnings 25,500 20,500 500 20 500 Total Shareholders 51,000 46,000 51,000 Equity Expected share price after; After 2:1 share split, the price of outstanding shares will be = RM10/2 = RM5 per share After 5% share dividend, the price of outstanding shares will be = RM10/(1+5%) = RM9.52 per share (b) The firmer leie datorminadlalu

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