Neco Model Questions Vol1 2024 Commerce Question 14

Practice objective / multiple choice question 14 from the 2024 Neco Model Questions Vol1 Commerce examination.

Neco Model Questions Vol1 2024 Commerce Objective / Multiple Choice Hard Difficulty
Question 14 NECO_MODEL_QUESTIONS_VOL1 • 2024 • COMMERCE • objective

A company has 1,000,000 shares outstanding, each trading at \(\text{₦}50\). It announces a 1‑for‑5 rights issue at a subscription price equal to 70% of the current market price. All rights are exercised and the market price adjusts to the theoretical ex‑rights price. After the rights issue the company reports total earnings of \(\text{₦}5,000,000\) and declares a dividend of \(\text{₦}2\) per share.\n\n(a) Calculate the new earnings per share (EPS) after the rights issue.\n(b) Determine the price‑earnings (P/E) ratio based on the new market price.\n(c) Compute the dividend yield (percentage) based on the new market price and the declared dividend.\nGive your answers to two decimal places.

Answer Options

A. EPS = ₦3.95, P/E = 12.10, Dividend yield = 4.50%
B. EPS = ₦4.25, P/E = 10.80, Dividend yield = 3.95%
C. EPS = ₦4.10, P/E = 11.80, Dividend yield = 4.00%
Correct Answer D. EPS = ₦4.17, P/E = 11.40, Dividend yield = 4.21%
Correct Answer
D
Correct Option:
EPS = ₦4.17, P/E = 11.40, Dividend yield = 4.21%

About This Question

This is Neco Model Questions Vol1 2024 Commerce Question 14. It is one of the objective questions from the 2024 Neco Model Questions Vol1 Commerce examination.

Difficulty level: Hard .

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