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Pacific Link Limited has authorized 2.5 million authorized shares and with 2 million ordinary shares outstanding and a price-earnings multiple of 35. The firm's annual
Pacific Link Limited has authorized 2.5 million authorized shares and with 2 million ordinary shares outstanding and a price-earnings multiple of 35. The firm's annual earnings is $800 000. It is considering a 20% bonus share issue to supplement its current low cash dividend policy. Required: What is the firm's current share price? How will it be affected by the proposed bonus share issue? Suppose you hold 200 Bell shares. What will be the impact of a bonus issue on the total value of your shares? What are the indicators of dividend policy? Define each indicator. Show All Relevant Working. Part B: A high dividend payment could decrease share price, increase it or make no difference. Explain, in detail, these three basic views on dividend policy
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