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Calculate the price of shares after the bonus

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Reference no: EM133060812

Hitech company has outlined its investment opportunities over the next 5-year window. The company has currently issued 2,500,000 million ordinary equity shares. The net income of the company is $600,000 and the price-earning ratio for the share is 10. The management of Hitech company is planning a 1-for-4 bonus issue.

a) Calculate the price of shares after the bonus shares are issued

b) If an investor owns 150 shares before the bonus issue, what is the total value of his shares post bonus share issue?

c) What would be the financial position of the investor after the bonus issue, relative to now? You can assume a proportionate reduction in the share price.

Reference no: EM133060812

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