Neco 2018 Commerce Question 26

A company announced a 2-for-1 stock split effective next month. Before the split the share price is \(\text{₦}200\) and a dividend of \(\text{₦}8\) per share is payable in two months. After the split the dividend per new share will be halved. An investor requires a 10\% annual return and expects the dividend yield after the split to be 4\% of the post‑split price. A brokerage fee of 0.5\% of the transaction value is charged on both purchase and sale. Determine the maximum price the investor should pay now (pre‑split) to achieve the required return, and compute the net profit percentage if the investor buys at the current market price and sells after one year when the price adjusts to the intrinsic value.