Gce Model Questions Vol1 2020 Commerce Question 19

A company's shares are currently trading at \(250\) naira each. It announces a 1‑for‑4 rights issue at a subscription price of \(180\) naira. Existing shareholders may subscribe to one new share for every four held, so the total number of shares will increase by \(25\%\) if the rights are fully exercised. (a) What is the theoretical ex‑rights price per share? (b) If the company pays an annual dividend of \(30\) naira per share, what is the dividend yield based on the ex‑rights price (expressed as a percentage to one decimal place)? (c) Given that earnings per share before the rights issue are \(45\) naira, calculate the new price‑earnings (P/E) ratio after the rights issue (to two decimal places).