Pukri Ltd is deciding whether to pay out R90 000 in excess cash in the form of an extradividend or a share repurchase. Current profits are R2,40 per share and the share sells forR20. The abbreviated balance sheet before paying out the dividend is:Equity 240 000 Bank/cash 90 000Debt 160 000 Other Assets 310 000400 000 400 000Evaluate each alternative (i.e: pay the dividend or repurchase the shares) by:1.1 Calculating the number of shares in issue1.2 The dividends per share (for the first alternative, i.e. pay the dividend) (1.3 Calculate:1.3.1 The new share price1.3.2 The EPS (1.3.3 The price-earnings ratio

Answer 1.1: The market value of R20 is taken as par value as the par value of Shares is not given.…

Answered: Pukri Ltd is deciding whether to pay…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A firm has 7,000 outstanding shares with current value of 10£ per share. Planned dividend is £5 per share. What is the ex-dividend share price? How much is the share price if the company decides to use the cash it had originally earmarked for dividend for a share repurchase instead? A. £5, £10 B. £10, £5 C. £8, £10 D. £2, £12 ( explain well with step by step answer ).
Sipacore Inc. is considering one of the three following courses of action: (1) paying a $0.50 cash dividend, (2) distributing a 5% stock dividend, or (3) effecting a 2-for-1 stock split. The current share price is $14 per share. Help Sipacore make its decision by completing the following chart (treat each possibility independently): Total assets (1) Before Action After Cash Dividend $1,196,000 1,146,000 (2) After Stock Dividend 1,196,000 $243,000 $ 243,000 $ 243,000 $ Total liabilities Shareholders' equity Common shares 647,000 Retained earnings Total shareholders' equity 647,000 306,000 256,000 953,000 903,000 710,000 306,000 953,000 Total liabilities and shareholders' equity $1,196,000 $ 1,146,000 $ 1,196,000 Number of common shares 100,000 100,000 105,000
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Determine the value of one ordinary share of Carter & Briggs using: Discounted free cash flows method. To assist you with the task, the following information is provided: During Year 0, dividends proposed and paid were £120m Number of ordinary shares remains stable = 500m Dividends annual growth rate to perpetuity = 4% Carter & Briggs’s WACC is 10%, while its cost of ordinary share capital is 12% Sales revenue for Year 0 = £1,200m Carter & Briggs will experience abnormal growth of sales revenue for the next five years = 16% p.a., which is followed by stable perpetual growth at 12% p.a. Operating profit margin will remain constant at 18% of sales revenue Corporation tax is stable = 30% Annual additional working capital investment over the next six years will be 7% of annual sales growth Annual additional non-current asset investment over the next six years will be 10% of annual sales growth Long-term debt is currently = £843m Sustainable growth rate from Year 6 is 2%
1. You are required to calculate the Weighted Average Cost of Capital (WACC) of Sethoo & Sons Limited from the data below: Black Limited Star Limited Number of Ordinary Shares (GH¢1.00) 2,000,000 1,000,000 Net Income available to Ordinary Shares 600,000 250,000 Gross Dividend 500,000 200,000 Market Price per share 3.00 2.00 Market value of Debts 3,000,000 1,500,000 Annual Growth rate of Dividend 12% 10% Gross Interest yield 10% 11% NOTE: The corporation tax rate is 50%. Debts are currently quoted at GH¢100 per block. 2. Explain why the Market Value Approach of calculating WACC is preferred to the Book Value Approach. 3. What are the uses of Weighted Average Cost of Capital?
Reese Co. pays a cash dividend to its stockholders in the amount of $50,000 the payment on the dividend will cause
Q2. On 1 July 2020 Farfalle pc had 5 million £1 ordinary shares in issue. On 1 September2020, Farfelle made a bonus issue of 1 for 2. Its profit after tax for the year ended 30 June 2021 is £3.8m. An ordinary dividend of £1.8m was paid(i) Calculate the earnings for year ended 30 June 2021(ii) Calculate basic EPS for the year ended 30 June 2021 to the nearest pence
Please answer asap! UPVOTE will be given! No long explanation needed. GMA Corp. has the following information in its shareholders’ equity: Ordinary Share Capital, ₱100 par value: ₱1,000,000 Subscribed Share Capital – Ordinary: ₱200,000 Subscriptions Receivable – Ordinary: ₱56,000 Share Premium – Ordinary: ₱32,000 Treasury Shares – Ordinary: ₱10,000 Accumulated Profits: ₱150,000 How much is the contributed capital?
3. Please help me to answer this completely. Thank you.
Hewlard Pocket's market value balance sheet is given. Assets Liabilities and Shareholders' Equity A. Original balance sheet Cash Debt 150,000 950,000 Equity $1,100,000 Other assets 1,100,000 Value of firm Value of firm $1,100,000 Shares outstanding = 100,000 Price per share = $1,100,000 / 100,000 = $1 Pocket needs to hold on to $52,000 of cash for a future investment. Nevertheless, it decides to pay a cash dividend of $2.10 per share and to replace cash as needed with a new issue of shares. After the dividend is paid and the new stock is issued: a. What will be the price per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the total value of the company? (Enter your answers in whole dollars, not in millions.) c. What will be the total value of the stock held by new investors? (Enter your answers in whole dollars, not in millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) d. What…
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Xtel Inc. with a total market value of $630 million has $30 million in excess cash and no debt. Xtel has 1 million shares outstanding. Xtelʹs board is meeng to decide whether to pay out its $30 million in excess cash as a special dividend or to use it to repurchase shares of the firm’s stock. You own 1,000 shares of Xtel stock. Assume that Xtel uses the entire $30 million to pay a special dividend. You are unhappy with Xtelʹs decision and would prefer that Xtel used the excess cash to repurchase shares. What is the number of shares that you would have to buy at ex-dividend price in order to undo the special cash dividend that Xtel paid?

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