Patrick Ntini holds 500 shares in Aloes Processing Co. The firm has 50 000 shares outstanding and R100 000 earnings available to common shareholders. Shares are currently selling at R25 per share. The firm decides to retain earnings and rather issue a 10% share dividend.

Based on the above, answer the following questions:

1.1 Determine the current EPS value. (3)

1.2 What proportion of the firm does Patrick currently hold? (3)

1.3 What proportion of the firm will Patrick hold after the share dividend? (4)

1.4 At what market price should the stock sell after the share dividend? (5) 1.5 Discuss how Patrick is affected by the share dividend (5)