Finance

Case 1 - Sh ar Buy post or Dividend fee (cont)
Required:

1. (2 marks)

Assume that the off-market buy-back occurs at precisely $44.00 minus the 14% discount.

(i) How many bundles will be bought back?

Answer
Buy-back expenditure per component=$44*(1-14%)=$37.84
So 132,320,296 shares will be bought back
($5.007 billion/$37.84=132,320,296 shares)

(ii) What will be the theoretical damage per share immediately following the buy-back?

Total value of shares (after buyback)=3,358,359,496*$44-$5.007billion
Total shares salient (after buyback) = 3,358,359,496-132,320,296
Price per share=
3,358,359,496*$44-$5.007billion/ (3,358,359,496-132,320,296)
=$44.25 ($44.25266061)

(iii) If total dividend payments are maintained for the future(a) 12 months at the same total amount as for the past 12 months, what will be the dividend per share?

Dividend per share=$3.172billion/3,358,359,496-132,320,296 (total amount of shares after buy back)
= 98.32 cent per share ($0.9832490566)

2. (4 marks)

For each(prenominal) of the 8 shareholder types assume a shareholder with 1,000 shares, thence calculate:

(i) How much better off (or worse off) they are to accept the offer, versus rejecting the offer and keeping their shares). [$ amount]

1.



Australian shareholders are entitle to use franking credits

Dividend component and franking credit?

Cash dividend per share (buy-back price - $0.28= $37.84-$0.28) $37.56
Effective dividend ($37.56/0.7) $53.66
Franking credit (53.66*0.3) $16.10

Capital component and capital substantiate revenue enhancement:

1.1Australian shareholders
Capital gain | 1.Zero tax| 2. low tax footstep| 3.medium tax rate| 4. high tax rate|
Capital proceed for tax purpose | $6,440| $6,440| $6,440| $6,440|
Less: bell of shares| $(30,000)| $(30,000)|...If you want to get a full essay, order it on our website: Orderessay



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