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Hi Teacher
Can you help me to solve this question of F7 practice book?Feton had 5 000 000 ordinary shares in issue on 1 Jan 20X1.
On 31 Jan 20×1, company made a right issue of 1 for 4 at $1.75. The cum right price was $2 per share.
On 30 Jun 20×1, company made an issue at the full market price of 125 000 shares.
on 30 Nov 20×1, company made a 1 for 10 bonus issue.
profit for the year was $ 2 900 000.
The reproted EPS for year ended 31 Dec 20×0 was 46.4c.
what was EPS for 20×1 and 20×0.
Thanks for reading.Restated 20×0 should be 41.13 cents
20×1 eps should be 42.39 cents
Did I get it right?
^^ yes you are right, this is BPP revision kit question.
i need help in this question too =)
Ok – I can’t write out the entire answer – apart from anything else, when I try to do columns, the page gets messed up
So here’s what I suggest …
… you’ve obviously got a printed solution in front of you
Why not try to follow the printed solution and then, if there’s something in there that you don’t understand, come back to me with that line / number / point and I’ll get back to you
Dear Mike,
I got rights fraction – 2/1.75
Bonus fraction 11/10
In previous examples I have come across one and not both, I will insert rights issue fraction to calculate 5m shares before the rights issue?
Also to calculate the restated EPS, which fraction should we use?
Many thanks
Look at the rights fraction calculation again
I get it to be 2/1.95
The fractions to use for restating are the reciprocals of the two fractions
So bonus is 10/11 and rights is 1.95/2
nice question. I tried working it out but got stuck. I have not seen a question with two rights issues in one financial year.
my workings:
with right issues we * the shares before the rights issue by the rights fraction.
From 1st Jan to 31st Jan= 1/12 *5m
31st Jan we have a rights issue 1/4*5m= 1250000
31st Jan to 30th June= 5/12*1250000=
30th June we bought= 125,000 shares
30th Nov we have a rights issue 1/10* (total of shares at 1st Jan/ 31st Jan & 3oth June) this is my confusion… so will it be 1/10*(5m+1250000+125000)?thanks
‘I have not seen a question with two rights issues in one financial year.’
You still haven’t!
One was a rights issue but the other was a bonus issue
You have given me a question that I cannot answer!
I need to know the share price from immediately before the rights issues – both of them
But I don’t believe that they were BOTH rights issues
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