Jessica currently holds 10,000 shares in Ford Car Company. The company has issued a total of 500,000 ordinary shares and no preference shares are issued. The available earnings for ordinary shareholders total $560,000 and its shares are currently selling for $11 per share in the market. The company intends to retain these earning and pay a 10% bonus shares instead of a cash dividend.
Find the following:
a) What are the current earnings per share (EPS) before the bonus shares distribution?
b) Express edasapercentage, what proportion of Ford Car CompanydoesJessica own before the bonus share distribution?
c) What is the market value of Jessica's shares before the bonus share distribution?
d) Expressed as a percentage, what proportion of the Ford Car Company will Jessica own after the bonus share distribution?
e) What will be the market value of Jessica's shares after the bonus share distribution if the market price is $10 per share?