A-LevelAccountingPreparation of financial statements9706/12 · May/June 2013 · Q191 Mark
A company has ordinary shares of $1 each. Each year it pays a dividend of 10% of the nominal value of the shares. It now wishes to raise a further $120000 by an issue of shares. This would bring in additional profit of $10000 and dividends paid would increase by $2500 a year. At which price should the company issue the new shares to maintain the percentage of dividend?
A$1.00
B$1.20
C$1.60
D$4.80
✓ Correct answer
D: $4.80
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