Calculate the new share price

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Reference no: EM132581890

Pukri Ltd is deciding whether to pay out R90 000 in excess cash in the form of an extra dividend or a share repurchase. Current profits are R2,40 per share and the share sells for R20. The abbreviated balance sheet before paying out the dividend is:

Equity 240 000       Bank/cash 90 000

Debt 160 000         Other Assets 310 000

400 000                                  400 000

Evaluate each alternative (i.e: pay the dividend or repurchase the shares) by:

Question a) Calculating the number of shares in issue

Question b) The dividends per share (for the first alternative, i.e. pay the dividend)

Calculate:

Question c) The new share price

Question d) The EPS

Question e) The price-earnings ratio

Reference no: EM132581890

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