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Show the impact of the share bonus

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Reference no: EM132983043

Question - Stockland Ltd had a total net profit of $19 million this year and 15 million common shares outstanding. Its ordinary share is currently trading at $35. Stockland Ltd. has recently declared an 8% share bonus.

a. Show the impact of the share bonus on Stockland Ltd's outstanding shares and current market share price.

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

c. From shareholders' perspective, will they prefer a share bonus or a share split? Explain.

Reference no: EM132983043

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