On 1 January 20x7, D Ltd issued 40 million ordinary shares at $1 per share.

On 1 January 20x8, D Ltd issued 5 million cumulative preference shares at $5 per share. The preference shares pay net dividends of 4% per year.

On 1 March 20x9, D Ltd made a 1-for-2 bonus issue of ordinary shares.

On 1 June 20x9, D Ltd made a 1-for-5 rights issue of ordinary shares at an exercise price of $1.80 per share. The market price of D Ltds shares immediately before the rights issue was $3 per share.

On 1 October 20x9, D Ltd bought back 2 million of its ordinary shares at $3.20 per share.

D Ltd had a profit after tax of $25 million for the year ended 31 December 20x8 and a profit after tax of $27 million for the year ended 31 December 20x9.

Required: (a) Compute the basic EPS for the year ended 31 December 20x8 presented in the 20x8 financial statements. Present your answer in dollars and round off your answer to four decimal places.

(b) Compute the basic EPS for the year ended 31 December 20x9 presented in the 20x9 financial statements. Present your answer in dollars and round off your answer to four decimal places.

(c) Compute the comparative prior year basic EPS for 20x8 presented in the 20x9 financial statements. Present your answer in dollars and round off your answer to four decimal places.

(d) In a rights issue, why is there a notional bonus element to be taken into account in the computation of the weighted average number of shares outstanding? How is it accounted for?