Nancy Lau currently holds 10,000 shares in the Icicle Company that supplies air conditioning systems. Icicle has issued a total of 250,000 ordinary shares and no preference shares are issued. The firm most recently had earnings available for ordinary shareholders of $750,000, and its ordinary shares have been selling for $34.10 per share. The firm intends to retain these earnings and pay a 10 per cent share dividend.
. (a) What is the firm’s current earnings per share?
. (b) What proportion of the firm does Nancy Lau currently own?
. (c) What proportion of the firm will Nancy Lau own after the share dividend?
. (d) At what market price would you expect the firm’s ordinary shares to sell after the share dividend?
