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Demonstrate the impact of share split on honey ltd

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Reference no: EM132735222

Honey Ltd had a total net profit of $9 million this year and 5 million common shares outstanding. its ordinary share is currently trading at $33. Honey Ltd. has recently declared an 10% share bonus.

Required

Problem A - Show the impact of the share bonus on Honey Ltd's outstanding shares and current market share price-

Problem B - Assume that instead of a share bonus, Honey Ltd announces a 7' to 5 share split. Demonstrate the impact of share split on Honey Ltd's outstanding shares and current market share price.

Problem C - From shareholders' perspective, will they prefer a share bonus ora share split? Explain.

Reference no: EM132735222

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