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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 is the maximum cash dividend per share that the firm could pay on ordinary shares before and after the share split? (Assume that legal capital includes all paid-in capital.)

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 is the maximum cash dividend per share that the firm could pay on ordinary shares before and after the share split? (Assume that legal capital includes all paid-in capital.)

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 99.4C
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QUESTION 3.3

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 is the maximum cash dividend per share that the firm could pay on ordinary shares before and after the share split? (Assume that legal capital includes all paid-in capital.)

 

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