John is a sharcholder of Carson Construction (Carson) and owns 100 shares of Carson. The board of directors of Carson recently announced a 20% stock dividend to all shareholders on record as at 30 Sept 2021. Assuming that Carson's current stock price is RM30 per share and there are 1,000,000 shares of stock in issue of RM1 par value, and its earnings per share (EPS) for last year was RM1.50.
John is a sharcholder of Carson Construction (Carson) and owns 100 shares of Carson. The board of directors of Carson recently announced a 20% stock dividend to all shareholders on record as at 30 Sept 2021. Assuming that Carson's current stock price is RM30 per share and there are 1,000,000 shares of stock in issue of RM1 par value, and its earnings per share (EPS) for last year was RM1.50.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
(i) Calculate the market capitalisation and earnings per share of Carson before and after
the stock dividend.
(ii) Based on the calculations in part (a) (i) above, explain the impact of the stock dividend on John’s ownership position and the market price of his stock investment
in the company.
Transcribed Image Text:Question 2
(a)
John is a sharcholder of Carson Construction (Carson) and owns 100 shares of Carson. The
board of directors of Carson recently announced a 20% stock dividend to all shareholders on
record as at 30 Sept 2021. Assuming that Carson's current stock price is RM30 per share and
there are 1,000,000 shares of stock in issue of RM1 par value, and its earnings per share
(EPS) for last year was RM1.50.
Required:
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