Finance and Value Creation
Problem One
Ex-Dividend share price
Ex-Dividend Share price
= Share price before Dividend – Dividend about to pay
= $76 – ((6.5 * (1-0.12))
= $70.28
Problem Two
- Five-to-three stock split
= previous stock price / the split ratio
= $72/ (5/3)
= $43.2
= Share price before Dividend – Dividend about to pay
= $72 – (0.12 * 72)
= $63.36
= $72 – (0.45 * 72)
= $39.6
- Five for seven reverse stock split
= $72 / (5/7)
= $100.8
Problem Three
Dividend for Year-1
D 1 = D + F x [(E x T) – D0]
Where,
D = DPS for year 0
F = Speed Ad
