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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Dividend question
Pls help me to solve this question:
RL Co is currently deciding on the level and form of its next dividend. It is considering three option:
i. A cash dividend payment of 20c per share
ii. A 6% scrip dividend
iii. A repurchase of 15% ordinary share capital at the current market price.
The company recent financial information are given below:
$’m
Operating profit 18
Finance cost 5
Profit before tax 23
Taxation 7.3
Profit after tax 15.7
Non-current assets 70
Current asset 53
123
Financed by:
Ordinary share capital(50c) 20
Reserves 103
123
Required: If current cum dividend share price is $4.20 per share, calculate the effect of the three option on the wealth of a shareholder owning 1,000 shares in RL.
