Kangaroo Ltd had a closing share price of $15 the day before shares in the company began trading on an ex-dividend basis.The dividend is 60 cents per share,fully franked at the company tax rate of 30 per cent.Assuming franking credits are fully valued,the expected ex-dividend share price is $14.14.

Question

Quizplus · Accepted Answer

The ex-dividend share price can be calculated as follows: 
Ex-dividend share price = (Closing share price - Dividend) + (Franking credit * (1 - Company tax rate))/Total number of shares
= ($15 - $0.60) + ($0.60 * (1 - 0.3))/1
= $14.14
Therefore, the expected ex-dividend share price is $14.14, as stated in the question, making the answer A.

Kangaroo Ltd Had a Closing Share Price of $15 the Day