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- May 29, 2020 at 7:01 pm #572237
This is the question:
Eight plc had an issued share capital at 1 April, 2014 of $ 42 million 50 cent equity shares.
On 15 August, 2014 Eight plc made a 2 for 5 bonus issue followed on 1 November by an
issue at full market price of 20 million shares at 75 cents each.This was followed on 1 January, 2015 by a 1 for 4 rights issue at 60 cents per share exercise
price. Mid-market price at the start of 2015 was 80 cents.
What is the weighted average number of shares in issue for Eight plc in the year to 31
March, 2015?This is the answer:
Incorrect
rights fraction is:
4@ 80 3.20
1@ 60 = 0.60
3.80/5 76 (ok)
rights fraction is 80/76(ok), bonus fraction is 7/5 (not ok)
84 x 7/5 = 117.6
1 April -1 November 7/12,1 November 1 January 2/12, 1 January-31 March = 3/12
117,600,000 x 7/12x 80/76 =72,210,526
137,600,000 x 2/12 x 80/76= 24,140,351
172,000,000 x 3/12 = 43,000,000
wanes 139,350,877I seems to have the exercise till there:
rights fraction is:
4@ 80 3.20
1@ 60 = 0.60
3.80/5 76 (ok)
rights fraction is 80/76(ok), bonus fraction is 7/5 (not ok)
84 x 7/5 = 117.6
1 April -1 November 7/12,1 November 1 January 2/12, 1 January-31 March = 3/12
117,600,000 x 7/12x 80/76 =72,210,526I calculated the shares for each date range and then arriving at the rights issue i did what you did in the lecture.
please explain to me this part:
137,600,000 x 2/12 x 80/76= 24,140,351
172,000,000 x 3/12 = 43,000,000
wanes 139,350,877especially what is the bonus fraction.
May 29, 2020 at 8:54 pm #572248Hi,
If there was a bonus issue of 2-for-5 then the onus fraction is 7/5 as there were 5 shares in issue before and 7 after (5+2) after the issue.
The rest of the solution is looking at the number of shares in issue, the number of months that they were in issue for and the rights issue fraction.
Thanks
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