Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Jill currently holds 10,000 shares in General Plants Company. The company has issued a total of 500,000 ordinary shares and no preference shares are issued.

Jill currently holds 10,000 shares in General Plants Company. The company has issued a total of 500,000 ordinary shares and no preference shares are issued. The available earnings for ordinary shareholders totals $550,000 and its shares are currently selling for $11.00 per share in the market. The company intends to retain these earnings and pay a 10.00% bonus shares instead of a cash dividend.

Find the following:

(a) What are the current earnings per share (EPS) before the bonus shares distribution? (1 mark)

(b) Expressed as a percentage, what proportion of General Plants Company does Jill own before the bonus share distribution? (1 mark)

(c) What is the market value of Jill's shares before the bonus share distribution? (1 mark)

(d) Expressed as a percentage, what proportion of the General Plants Company will Jill own after the bonus share distribution? (1 mark)

(e) What will be the market value of Jill's shares after the bonus share distribution, if the market price is $10.00 per share? (1 mark)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Theory And Practice

Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason

3rd Canadian Edition

017658305X, 978-0176583057

More Books

Students also viewed these Finance questions

Question

Define Administration and Management

Answered: 1 week ago

Question

Define organisational structure

Answered: 1 week ago