Pink Limited Purple LimitedEarnings before interest and taxR3 000 000 R4 000 000Long term interest bearing debtR500 000R800 000Earnings attributable to shareholders R2 124 000 R2 822 400Tax rate28%28%Share CapitalR2 00 000R5 000 000Number of ordinary shares issued200 000400 000Number of ordinary shares authorised 1 000 000500 000Current market price of the shareR30R20.00Dividend per shareR5R3As a financial manager you are very concerned about the dividend yield and dividend payout ratio as these will be your indicators of the return on yourinvestments.Q.3 Calculate the dividend yield for both companies.

Dividend yield is the ratio between dividend per share and the current stock price. It shows the…

Answered: Pink Limited Purple Limited Earnings…

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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Problem 6: Treasury Shares year 20x1: Valientes Corporation reported the shareholders. Equity at the beginning of the Ordinary share, P10 par, outstanding 225,000 shares Share Premium Retained Earnings 2,250,000 1,500,000 2,000,000 During the year, the entity had the following treasury shares transactions: Acquired 10,000 treasury shares for P500,000. Sold 5,000 treasury shares at P60 per share - Sold 2,000 treasury shares at P45 per share. Required: a. Prepare the journal entries b. Prepare the shareholders' equity at the end of the year
Acquirer Shares Outstanding Target Shares Outstanding Acquirer Share Price Target Share Price Stock Consideration Cash Consideration Share Issuance Discount Tax Rate 917,712 991,813 1,000,000 25,000 $5.00 $10.00 Given the following data, calculate the pro forma number of shares outstanding (Rounding to the closest whole number). 1,081,633 1,261,613 $400,000 $200,000 2% 25%
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The Investments and Dividends Income accounts of Babe Time Company are shown below: Trading Securities Date Description Ref. Debit Credit 06/22/14 5,000 ordinary shares, par value P100, Bebe Co. CD – 28 520,000 12/31/14 Adjustment to fair value 80,000 05/31/15 500 shares Bebe Co. received as bonus issue GJ – 10 12,000 07/10/15 Sold 1,000 shares @ P130 net of transaction cost CR – 21 130,000 12/04/15 Sold 1,000 shares @ P140 CR – 40 140,000 Dividend Income Date Description Ref. Debit Credit 05/31/15 Bonus issue (stock dividend) GJ – 10 12,000 08/01/15 Cash dividend on Bebe Co ordinary shares CR – 22 22,500 The following information was obtained during your examination: The December 31, 2014 statement of financial position of Babe time Company showed, among current assets, Trading Securities of P600,000. You obtained the following…
a. P125 b. P133 c. P141 d. P191 e. answer not given
QUESTION 2Naruto Bakery has a capital structure consisting of:42,000 issued and paid-up ordinary shares RM105,0005,000 issued and paid-up 10% Preference shares RM15,0008% Bonds (10-year maturity) RM30,000The balance of retained earning as at 1 January 2021 was RM75,000. The market priceper unit of the company’s financial instruments are as follows:Ordinary shares : RM2.50 (last dividend paid was RM0.50; growth rate is 5%Preference shares : RM3.008% Bonds : RM890.00 (par value RM1,000)The company is considering to invest in new project worth RM80,000. The floatationcost to sell more shares and bonds are 5%. The corporate tax rate 25%.You are required to calculate (show all workings):b. The company’s cost of debt, preference share, retained earnings and newissuance of ordinary shares.
Ordinary share, P1 par P4,800,000 Share premium in Excess of Par— Ordinary share 550,000 Preferred 8 1/2% share, P50 par 2,000,000 Share premium in Excess of Par—Preferred share 400,000 Retained Earnings 1,500,000 Treasury ordinary share (at cost) 150,000 The total shareholders' equity of Uub Corporation is a. P9,100,000 b. P9,250,000 c. P7,750,000 d. P7,600,000
QUESTION TWO B plc has the following capital structure: K’000Ordinary shares – K0.40 5,000 Retained earnings 500 10% Preference shares at K1 1,500 10% K100 redeemable debentures 3,000 Total funds employed 10,000 The market price of the preference shares is 80n ex-div, the ordinary shares are quoted at K1.62 cum-div per share. Debenture stock is quoted at K97.5 ex-interest per K100 nominal and will be redeemable at par in exactly 7 years’ time. B plc has just declared dividend of K1,500,000 in total for all issued ordinary shares. The dividend growth rate is 4% per year forever. Company tax is 30% per year. The market rate of return is 12% and the company has an equity beta value of 1.25 Required:a) Calculate WACC based on market values. b) Discuss the implications of using a wrong WACC value in project appraisal and comment on the current level of capital gearing.
Year 2 Year 1 Preference share, par value P50, 10%. Ordinary share, par value P20. Share premium - ordinary share.. Retained earnings... P100,000 400,000 P100,000 400,000 100,000 100,000 140,000 120,000 Net income 60,000 10,000 80,000 Dividends on preference share Dividends on ordinary share Market price per share, Dec 31. 10,000 50,000 40,000 28.00 21.00 Instruction: Determine the following A. Price-earnings ratio B. Dividend yield ratio C. Payout ratio D. Return of Equity E. Book value per share
O O b. R12 250 Oc. R15 000 O d. R15 000 When calculating the weighted average number of shares outstanding, the number of shares are not time- weighted by the fraction of the reporting period they are (are not) outstanding for Select one: O a. common shares issued during the period as a stock dividend O b. common shares retired O c. new common shares sold during the period O d. shares obtainable in executive stock options granted in mid-year A corporation bar 12 000 ordinon mi mmm man må metiene to nurchaeo 1 500 ordinanechame at 010 nor chara her 13 chara 99+
At Dec.31,2020 X company has following Balances #of Shares Share Capital of OS $500,000 at par value of $10per share 50,000 Share Capital of PS $100,000 at par value $100 per share 1000 Retained Earning$200,000 PS has a right in 5% interest not cumulative and not participating compute Book Value (BV) per share
QUESTION 3.2 Tusker Corporation is considering a 3- for- 2 share split. It currently has the shareholder’s equity position shown. The current share price is R120 per share. The most recent periods earnings available for ordinary shares are included in retained earnings. Preference shares R1 000 000Ordinary shares (100 000 shares at R3 R300 000per shareShare premium R1 700 000Retained earnings R10 000 000Total shareholders’ equity R13 000 000 What change in share price would you expect to result from the share split?

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