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Rzs has recentlt paid dividend of 34c, 4 years ago 12c/share. There was 1:1 bonus issue of share 2 years ago. Current share price is 5$.
whhat is cost of equity.answer: because of bonus issue so : 12 x 2 (1+g)^4 = 34
i can not under stand, why they multiply 2 for 12,
if 4 years ago, total dividend payout / n shares = 12 c, so now, total dividend payout(1+g)^4/ 2n share = 34 <=> 12/2(1+g)^4 =34please explain for me!
another problem, they said to reduce the level of debt, they will do sale and leaseback, but sale and lease back will also increase the liability and interest,( finance lease) so why they explain like that (40 Newsam co)
First question:
It is because all the shareholders now have two times as many shares because of the bond issue.
Second question:
We are not doing financial accounts, and however financial accounts may want to present it leasing an asset is not actually taking on extra debt (we can reduce the level of debt by using the proceeds to repay some debt).
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