Hi mike
Alfred has correctly calculated the EPs of the current year but isk confused about how to restated last year EPs.
On 31/3/201$ there had been a 2 for 5 right issue with an exercise price of 1.25. Mid market price before the issue was $3.corpora the tax rate 30%.
By what fraction should last year EPs be multiplied?
Ask the Tutor ACCA FR
eps mcq opentuituition
10y ago#15/6
yes sir I got the answer from the mcq, but how to reach there?
10y ago#3Calculate the rights fraction as I have shown in the notes. Then turn it upside down
Have you read the course notes? They are free on this site!
You did have 5 shares worth $3 each = $15
You now have 2 more cost $1.25 each = $2.50
So now you have 7 cost $17.50
That's a theoretical ex-rights price of $2.50 each and a cum-rights price of $3
So the rights fraction is 3/2.5 and the reciprocal is therefore 2.5/3 and that's the same as 5/6
Read the notes!
ok thanks, I do understand now. im just confused some questions the number of share is used to find the restated eps, some the the formula you used.
10y ago#5You seem to be confused between two separate issues!
1) rights issues and bonus issues and the calculation and use of their respective fractions, and
2) the adjustments necessary before we can calculate diluted earnings per share
Worth another look, maybe?
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