What change in share price would you expect to result from the share split?

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
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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 000 000
Ordinary shares (100 000 shares at R3                      R300 000
per share
Share premium                                                               R1 700 000
Retained earnings                                                          R10 000 000
Total shareholders’ equity                                            R13 000 000

What change in share price would you expect to result from the share split?

 

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